Climate Change, Extreme Events and the Canadian Insurance Industry
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At the same time that a scientific consensus has arisen that the world will most likely experience a changing climate in the near future, with more frequent extreme events of some weather hazards, the insurance industry, worldwide, has been hit with rapidly escalating costs from weather-related disasters. This conjunction of scientific belief and economic impact has raised the questions as to (1) whether more frequent extreme events have contributed to the rising insurance costs and (2) how will future climate change affect the industry?
Based upon historical data, it is difficult to support the hypothesis that the recent run of disasters both world-wide and in Canada are caused by climate change; more likely other factors such as increased wealth, urbanization, and population migration to vulnerable areas are of significance.
It seems likely, though, that in the future some extreme events such as convective storms (causing heavy downpours, hail and tornadoes), drought and heat waves will result in increased costs to the industry, should the climate change as anticipated.
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