Wildfires, disease and the need for insurance-industry leadership
Becoming climate change solution-builders will reverse negative stereotypes linked to insurance while boosting the industry's financial health.
In the Denver area, where I live, waking up to a dusting of wildfire ash on cars and outdoor furniture has become a regular occurrence as thousands of acres of wooded Rocky Mountain terrain continue to burn. Itchy throats, runny noses and watery eyes from smoky air are now the norm, and that’s just for healthy people. For individuals with weakened respiratory systems, the fires are yet another reason to stay home in 2020.
All of this seems minor compared to what’s happening in communities near California’s millions of charred acres. San Francisco sometimes looks like a snow-globe town — not to mention the many businesses and people who have lost loved ones and properties to this year’s ferocious fires.
I find it impossible to watch the increasingly dangerous and destructive nature of wildfires without thinking about climate change. If like the vast majority of scientists, you believe that climate change exists, you also have to accept that global warming has been the proverbial match igniting most of today’s massive wildfires. I realize that eight out of 10 wildfires in the U.S. are caused by people. But after that initial spark, it’s the warmer temperatures, increased drought and drier, more explosive forest fuels caused by climate change that propel so many fires to burn for weeks on end.
In the face of such tragedy, the insurance industry has a larger role to play than its everyday work of assessing risk and paying claims. Taking the lead as climate change solution-builders not only helps to reverse negative stereotypes linked to insurance, it also buoys the industry’s financial health. “We need to show what a good (climate change) solution looks like,” Veronica Scotti, chairperson of Public Sector Solutions at Swiss Re, said during the 2020 World Economic Forum, “and make that solution available, fundable and sustainable.”
Scotti is among the insurance leaders arguing that carriers and their business partners are uniquely positioned to educate and mitigate against future climate-related disasters.
It boggles the mind, however, to consider just how much our global perspective and attention has shifted since Scotti spoke during a panel discussion titled “Climate Risk and Response.” The event in late January happened almost concurrently with the publication of the first major study of COVID-19, which was already spreading across borders and continents at that point.
As it turns out, there’s a link between climate change and disease as atmospheric temperature extremes impact vector-borne and water-borne disease growth, strength and transmission. The World Health Organization has a whole list of ailments such as malaria, cholera, lyme and red tide that are effectuated by environmental changes.
And here’s another link between the two topics, which just happen to be timely this month: The U.S. general election. In the heated race for president, one camp argues that climate change is essentially a hoax while the other team touts an aggressive clean-energy plan.
Personally, I find it disheartening that climate change and disease mitigation have become politicized as they are both issues that humans must grapple with, regardless of how they vote.
I’m also struck by the opportunity at hand for insurance leaders to foster stronger, more impactful predictive modeling, reach across political party lines and industry divides to forge partnerships and solutions in the name of environmental (and human) resilience, and further creative coverage options including catastrophe bonds and parametric policies.
Such efforts can only be a step in the right direction.
And that’s what’s top of mind for me this month.
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