Ernst Rauch, Munich Re’s chief climatologist, told The Guardian that the costs could soon be widely felt, with premium rises already under discussion with clients holding asset concentrations in vulnerable parts of the state.
“If the risk from wildfires, flooding, storms, or hail is increasing, then the only sustainable option we have is to adjust our risk prices accordingly. In the long run it might become a social issue,” he said after Munich Re published a report into climate change’s impact on wildfires. “Affordability is so critical [because] some people on low and average incomes in some regions will no longer be able to buy insurance.”
The lion’s share of California’s 20 worst forest blazes since the 1930s have occurred this millennium, in years characterized by abnormally high summer temperatures and “exceptional dryness” between May and October, according to a new analysis by Munich Re.
Wetter and more humid winters spurred new forest growth which became tinder dry in heatwave conditions that preceded the wildfires, the report’s authors said.
After comparing observational data spanning several decades with climate models, the report concluded that the wildfires, which killed 85 people, were “broadly consistent with climate change.”
Nicolas Jeanmart, the head of personal insurance, general insurance, and macroeconomics at Insurance Europe, which speaks for 34 national insurance associations, said the knock-on effects from rising premiums could pose a threat to social order.
“The sector is concerned that continuing global increases in temperature could make it increasingly difficult to offer the affordable financial protection that people deserve, and that modern society requires to function properly,” he said.
Munich Re’s insurance cover in hurricane-prone regions such as Florida is already higher than in northern Europe, by an order of magnitude.
Read more at Climate Change Could Make Insurance Unaffordable for Most People
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