Insured catastrophe losses have increased by nearly 700 percent since the 1980s when adjusted for inflation, hitting about $88.4 billion per year on average. The industry is seeing business-as-usual methods become obsolete in the wake of increased frequency of wildfires, floods and other natural disasters.
Testing and supporting solutions, such as group insurance products that provide catastrophe insurance at a community level, has shown some promise. Embracing that innovation is vital to ensure that people who live in, or plan to move to, areas vulnerable to extreme weather events, such as California, Florida and Texas, can live their lives with resilience, Kevelighan added.
“The traditional risk transfer model in some areas will absolutely be, and even today, in jeopardy,” said Kevelighan, who previously held executive roles at Zurich Insurance Group and Citigroup Inc.
The speech follows action by the National Association of Insurance Commissioners, a bipartisan group of state regulators, which on April 8 adopted disclosure standards on climate risk. The standard-setting organization is governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories.
The new standards, led by California Insurance Commissioner Ricardo Lara and Florida Insurance Commissioner David Altmaier, bring the NAIC in line with the Task Force on Climate-Related Financial Disclosures, or TCFD, the international benchmark for climate risk disclosure.
