Climate change will drive up insurance premiums, Waterloo researcher says
Researcher Jason Thistlethwaite says insurance providers are not adapting to severe weather
University of Waterloo researchers say ignoring climate change could carry a high price tag for insurers and home owners in the future.
Jason Thistlethwaite and his colleague Mike Wood studied how 178 American insurance companies answered a survey by the National Association of Insurance Commissioners.
- Canada must do more to minimize flood risk, says climate expert
- Climate change not one heat wave but a pattern of extremes: Waterloo scientist
The survey asked how companies were changing their underwriting, investment and hiring practices in view of climate change.
"What we found, to our surprise, was that there was little evidence that insurance companies were changing their behaviour at all," Thistlethwaite told CBC K-W.
The danger, said Thistlethwaite, is that as severe weather becomes more and more common, insurers will have to recover their costs by raising premiums.
Eventually, he said it is possible that the cost of insurance will be unaffordable.
"The future we're looking at right now, if the industry doesn't start changing its behaviours, is one where insurance is not going to be available or affordable outside of those with resources," Thistlethwaite said.
In a scenario like that, he said ordinary people will have to "self-insure," by putting money aside so they can fix their own homes in the event of severe weather or a natural disaster.
He suggests the government may need to step in and better regulate insurance companies, so that insurance continues to be something the average homeowner can afford and depend on.