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    Why Insurance Underwriting is Ignoring Climate Change

    June 23, 2017

June 23, 2017

Why Insurance Underwriting is Ignoring Climate Change

The whole idea of insurance underwriting is to evaluate the risks and exposures of potential clients; they then decide how much cover the client should receive and how much they should pay.

But how does this tie in to climate change?

Climate change is described as an alteration in global or regional climate patterns. It is believed 97% of researchers agree that climate change is real and is becoming an ever-increasing problem. It is also estimated that climate change will displace 250 million people by 2050.

With these sorts of statistics, you would think that insurance underwriters would realise that offering climate change protection would be a competitive market. So, why aren’t insurance companies catching on to this idea?

Physical and Liability Risks:

Extreme weather is becoming some-what of an expected occurrence. With increasing levels of physical risk, this could present a significant challenge to general insurance policies. Often, climate change models are incompatible with insurance models.

Damage to the Industry:

If insurance companies began to consider the possibility of global warming, they would have to account for the extra cost to provide cover. Many of which, undoubtedly, couldn’t afford. Similarly, the government could introduce a policy change which involves moving toward a low-carbon economy. This would encourage a reassessment of investment which would greatly impact the industry as a whole.


A big determining factor with insurance companies is time. Many policies only cover clients for a year. Of course, climate change is ongoing, so it would be near on impossible for underwriters to devise a suitable policy. To add to this, companies prefer to focus on the short term rather than the long term- not is it easier to measure but it is most likely more cost effective, making it beneficial for the company as well as the client.

The team here at Bespoke Support Network we ensure your insurance policy is tailored exactly to you. If you would like advice or a consultation, please get in touch with us on 0300 303 3441.


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