As extreme weather events and related losses increase around the world, the Geneva Association calls for action to safeguard the availability and affordability of home insurance, particularly in advanced economies.
In its recent report, ‘Safeguarding Home Insurance: Reducing exposure and vulnerability to extreme weather’, the Geneva Association examines the socioeconomic factors increasing exposure and vulnerability to extreme weather events.
It also provides a practical roadmap for mitigating property risks and enhancing local resilience.
Global insured losses from natural catastrophes are now consistently exceeding USD 100 billion each year.
This escalating trend results not only from climate change-induced weather but also from development patterns, with construction frequently occurring in high-risk zones, utilizing outdated building codes and methods that diminish natural protective barriers.
The report found that combined with the rising costs of rebuilding due to inflation, these factors could push insurance affordability to a tipping point in some regions.
The report conducted an in-depth analysis of housing sectors in Australia, Canada, the EU, Japan, and the US, identifying two tiers of action.
1) scaling proven, incentives-based local resilience strategies, and 2) implementing structural reforms, particularly in mortgage systems, and incorporating resilience in credit ratings.
Addressing intensifying weather extremes risks requires an all-of-society effort, the report argues, specifically calling on homeowners, lenders, governments, and regulators, alongside re/insurers.
It also highlighted that risk-based insurance pricing incentivises the measures needed to mitigate the risk of property damage and preserve home insurance as a reliable safety net.
