Insurers warn climate change means an unhealthy prognosis for cover

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The effects of climate change in making extreme weather more severe and frequent is increasingly seen as a significant threat to the insurance sector, through widespread damage to property.

But a less-followed risk is adding to unease at companies offering life and health insurance: scientists’ warnings, and research findings, that a warming climate is causing an increasing number of excess deaths, and forcing more people into ill-health.

First, there is the impact on mortality from record-breaking temperatures: Europe’s 2022 heatwave caused more than 60,000 deaths, according to research published in the journal Nature Medicine. The human toll of wildfires, floods and other natural catastrophes exacerbated by climate change is gaining more attention, but experts also highlight the large numbers who will be left sicker by a warmer and more volatile natural world.

“Wildfires don’t just kill people,” says Adrita Bhattacharya-Craven, director for health and demography at the Geneva Association, a global group representing insurance sector CEOs. “We are seeing cardiovascular diseases, we are seeing respiratory illnesses and, in some cases, mental health problems, when people lose everything.”

Long-term exposure to air pollution, where climate change is a factor, is another example of what Bhattacharya-Craven calls a “multiplying effect” from the climate on morbidity — the rate of acute or chronic ill-health in a given population. As an example of the far-reaching effects, she cites research linking air pollution to type-2 diabetes.

To highlight the implications of climate change for life and health insurance, the Geneva Association, together with Wellcome, the research foundation, published a paper in February. It identified a range of effects, from heat-related illnesses to a greater spread of infectious diseases in a warmer climate, as well as the mental health impacts of extreme weather events.

“Climate change will exert a huge toll on human health, via direct fatalities from extreme weather events as well as adverse effects on morbidity,” the paper warned. In addition, there are secondary effects, such as health impacts caused by what the paper identifies as the “unrest, displacement and economic hardship” caused by climate change to agriculture and the natural environment.

Executives are taking the risks seriously. Nicolas Jeanmart, head of personal and general insurance at Insurance Europe, which represents EU insurers, says: “The focus of insurers has so far been less on public health but rather on damages to properties. [However,] it is becoming increasingly evident that climate change is not only an environmental or economic issue but also a critical health issue”.

Deepak Jobanputra, chief sustainability officer at health insurer Vitality UK, says the physical impact of climate change is “likely to become one of the more significant” health risks. “For life and health insurers, the primary concern is the direct or contributory impact of climate change on mortality and morbidity — particularly [for] those who have existing health conditions or are more susceptible to poor health.”

For now, research suggests that insurers view this as a long-term impact on payouts, although there is a question as to whether they have the data to be sure.

“I don’t think we have the tools to really say that with a lot of certainty,” says Bhattacharya-Craven. Attribution is a big challenge, she argues, given that insurers would not have climate-specific data that would give context to when a customer first developed asthma, for example. With health insurance claims generally on the rise in developed markets, climate-related claims could “have sneaked in already”, she points out.

Madeleine Thomson, head of climate impacts and adaptation at Wellcome and a contributing author to the joint paper with the Geneva Association, predicts that “we are fundamentally going to be living in a riskier world for our health”.

“The most vulnerable globally are those in the hottest places in countries without health infrastructure or cooling,” she says. In terms of regions with significant insured populations, areas such as southern Europe and the US south are a focus.

“In particular, there are major risks to outdoor workers who are at risk of heat-related health issues,” Thomson adds. Texas has set a yearly record for heat deaths for the past three consecutive years, according to The Texas Tribune.

However, executives also draw attention to those health factors that can be influenced. Vitality’s Jobanputra calls for the insurance industry and governments to look much more at prevention — exercise schemes and other efforts that can limit the impact of a changing climate on health. The Geneva paper even suggests new types of insurance policy could be created to help limit the effect — such as those that cover loss of income if the temperature rises above a preset level.

But the bigger concern among experts is that the private sector will instead pull back: insurers will recoil from offering life and health cover to certain climate-exposed areas or segments of the population. “As risks increase because of climate change, we will need insurance more than ever, but access to insurance may become more limited,” warns Wellcome’s Thomson.

Insurers have a crucial role in encouraging behaviours that mitigate climate effects or help us adapt to a warming world, she argues, and they need to play it now: “Adaptation has its limits and, in some regions of the world, we seem perilously close to those limits”.