I was interviewed by David Vetter at Forbes about risks to the insurance industry from climate change.
You can read the article here.
“Because insurance impacts are mounting and because we don’t have an insurance system built for the way that climate change is evolving, this dynamic is only going to get much worse,” Laybourn said. “As we’re already seeing, governments are having to step in to effectively ensure that insurance can still exist in certain places.”
Laybourn told me that recent extreme weather events in the U.S. and the U.K. had revealed that the insurance sector was extremely vulnerable to climate risk—and that while firms continued to reap profits, losses were increasingly being covered by the state.
“In Florida, you have a situation where flood insurance is increasingly receding and the government is having to make decisions about how and what to cover,” he said. “It’s the case as well in the U.K., where major flooding events led to the creation of Flood Re, a government-backed reinsurance agency to cover places that are effectively uninsurable through private markets.”
Laybourn said that the situation threatened to create a “doom loop,” in which climate impacts cause increasing financial and social instability, which in turn prevents the rapid action action to prevent further climate change.
“We need systems that are more resilient so that we can continue to remain focused on decarbonization, even as things get more unstable,” he said.
Laurie Laybourn 