Health Insurers Need to Focus on Climate Change

A worldwide insurer, Swiss Re, predicted last year that lawsuits related to climate change can advance quicker than asbestos litigation and have a significant impact on insurers. "We expect, however, that climate change-related liability will develop more quickly than asbestos-related claims and believe the frequency and sustainability of climate change-related litigation could become a significant issue within the next couple of years," Swiss Re stated in a report.

NAIC has adopted a regulation that requires insurance companies to complete an annual eight-question survey about their financial risks associated with climate change and what actions they are taking to respond to those risks. The survey will assess insurers' risk assessment and management efforts and allow regulators to follow up with questions if necessary, according to the NAIC.

The survey includes questions about what insurers are doing to reduce greenhouse gas emissions, whether they have a climate change statement of policy, whether they consider climate change as they choose investments, what they have done to encourage policyholders to reduce losses caused by climate-influenced events, how they are engaging their members on the topic of climate change, and how climate change could impact the insurer's investment portfolio.

The policy will require all insurance companies with annual premiums of $500 million or more to complete the Insurer Climate Risk Disclosure Survey and submit them to the state insurance commissioner where the company is domesticated. The first reporting deadline is May 1.

"Climate change will have huge impacts on the insurance industry, and we need better information on how insurers are responding to the challenge," said Pennsylvania Insurance Commissioner Joel Ario, who chairs the NAIC Climate Change and Global Warming Task Force, in a recent announcement about the new requirement.