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Op-Ed: why we need to fix disaster insurance markets this year and how to do it

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By illuminem briefings

· 2 min read

illuminem summarizes for you the essential news of the day. Read the full piece on or enjoy below:

🗞️ Driving the news: Carolyn Kousky, from the Environmental Defense Fund, highlights the urgent need to address the failing disaster insurance markets, exacerbated by climate change
• Insurance, crucial for financial protection against disasters, is becoming scarce, unaffordable, and inadequate in coverage, particularly in the United States

🔭 The context: The traditional insurance model struggles with disasters due to the simultaneous occurrence of large losses 
• Climate change further challenges this model, leading to insurer bankruptcies, soaring premiums, market withdrawals, and restricted coverage 
• Public sector programs are increasingly burdened as risks migrate from the private sector

🌍 Why it matters for the planet: Effective disaster insurance is vital for community resilience, enabling repair, rebuilding, and recovery, thus reducing stress and ensuring continued investment in sustainability 
• The failure of insurance markets signifies a broader challenge in adapting to and mitigating climate change impacts

⏭️ What's next: Kousky calls for transformative investments in risk reduction and climate adaptation, including stronger building codes, retreating from high-risk areas, and enhancing protective infrastructure 
• Insurers should play a key advisory role, support risk reduction investments, and promote policies that facilitate rebuilding to higher standards

💬 One quote: "Insurance plays a critical role in protecting people financially after a disaster. And once they have this financial protection, it benefits other areas of life, too." (Carolyn Kousky)

Click for more news covering the latest on sustainable finance


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