By Jed Kim

The specter of a changing climate means the need to adapt to factors such as rising sea levels, increased heat and changing weather patterns. It also means financial adaptations, such as deciding whether to change from long term investments in emission intensive industries.

A couple of recent studies show the insurance industry still faces a lot of uncertainty in how it will address climate change.

First, a report from the Asset Owners Disclosure Project updated its annual assessment of the 500 biggest investors and how they are responding to climate change through their holdings. It found that though insurers are beginning to change strategies, they still lag when it comes to addressing the risks of potentially stranded assets in their portfolios…

…The study by University of Chicago economics professor Michael Greenstone looked at the practice of Florida and other states to cap premiums for policyholders who live in riskier areas along the coast. He said that practice shifts costs onto other customers.

“The problem is that the insurance company needs to be made whole at the end of the day, and the only way — if you’re going to subsidize one group of people — the only way to make that work is to have a different group of people pay more than their fair share,” Greenstone said.

He said the effects of premium capping extends beyond fair pricing, however…

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Areas of Focus: Climate Change
Climate Change
Climate change is an urgent global challenge. EPIC research is helping to assess its impacts, quantify its costs, and identify an efficient set of policies to reduce emissions and adapt...
Climate Economics
Climate Economics
Climate change will affect every sector of the economy, both locally and globally. EPIC research is quantifying these effects to help guide policymakers, businesses, and individuals working to mitigate and...