"The insurance industry is facing the climate challenge head on," said Nina Seega, research director of sustainable finance at the Cambridge Institute for Sustainable Leadership. (Credit: EvgeniyQW/Adobe Stock)
(Bloomberg) — When it comes to climate impacts, the frontline of the finance industry is insurance. Last year's payout from damages caused by extreme-weather events totaled some $120 billion — about the same as the economic output of Kenya. And that's a 50% increase over the previous decade's average.
It's becoming a big problem. Insurance provides companies and individuals with the peace of mind that, for a small premium paid regularly, they will be covered for when catastrophes such as floods or wildfires hit. However, if the payouts increase because more customers are making claims, then the insurance industry either takes in lower profits or it has to increase the regular premiums customers pay.
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