SUSTAINABILITY
“ That would begin to shift more of the risks of climate change from the policyholder to the insurer . In addition , if multi-year insurance products covering these weather events were more mainstream , then insurers would likely be more encouraged to work with policyholders , tech firms , designers , planners and construction firms to support and encourage better risk mitigation over the longer term as the pricing of the climate risks would move from being dynamically adjusted by the insurer each year ( including saying ‘ you are now uninsurable ’) to the premium and risk being locked in for five or 10 years or more ,” adds Martin .
As Rory notes , we need a lot more of these initiatives , and quickly . “ Insurance markets aren ’ t defining the problem correctly . The challenge is bigger than simply pricing the risk . Resorting to premium increases or leaving markets entirely can ’ t be the only tools an insurer ’ s kit bag . Otherwise , we risk leaving millions of people , businesses and communities exposed .”
A paper : Misalignment between insurance rates and actual risks The paper ' Pricing of Climate Risk Insurance : Regulation and Cross- Subsidies ' examines the impact of state-level price ( rate ) regulation on US homeowners ’ insurance , focusing on how insurers adjust their pricing strategies in response to climate risks . The study uses two identification strategies and unique data sets , including regulatory filings and ZIP code level rates , to explore how
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