Potential climate change litigation affecting insurers may be just beginning. A potential flood of lawsuits "will pose a challenge" especially because of demands for insurance carriers to cover defense costs or other liabilities, says attorney Stephen Rosenberg of Boston, writer of the Boston ERISA and Insurance Litigation Blog.
"Everything eventually makes its way through the insurance industry, in terms of any types of new lawsuits or liability theories," Rosenberg wrote. "Litigation over climate change will be no different. The suits are coming."
While the credibility of any potential climate change lawsuit has yet to be determined, "they will pose challenges for the insurance industry because the development of theories of liability in this area will eventually lead to demands for insurance carriers to cover the defense costs or liabilities arising from those theories," according to Rosenberg.
Health insurers are being asked to react to potential climate change because of its potential to compound current health issues, such as asthma; people exposed to hurricanes and floods; heat-wave related health issues; and more airborne allergens, rising temperatures, greater humidity, wildfires, and dust and particulate pollution may "considerably exacerbate" upper respiratory disease and cardiovascular disease, according to the National Association of Insurance Commissioners (NAIC).
Rosenberg, whose legal specialty includes insurance law, says he expects climate change litigation against healthcare insurers to be similar to asbestos and pollution cases. "This will raise a whole host of issues for carriers that will mimic the types of issues that played out with regard to the large scale—and often unanticipated—exposure posed by environmental litigation and asbestos, only on a broader and probably even more complicated level."
From the insurers' standpoint, much of the argument may rest on "no credible evidence " that the climate change caused health damages. While insurers can "make holes" in any plaintiff arguments, the potential "defense costs alone will be huge," he says.
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.
Joe Cantlupe is a senior editor with HealthLeaders Media Online.
