Home Business U.S. Treasury climate official seeks insurance changes for extreme weather By Reuters

U.S. Treasury climate official seeks insurance changes for extreme weather By Reuters

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© Reuters. A person works to clean up damage in a flooded store after the remnants of Tropical Storm Ida brought drenching rain and the threat of flash floods and tornadoes to parts of the northern mid-Atlantic, in the Bronx borough of New York City, U.S., September

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By Andrea Shalal and David Lawder

WASHINGTON (Reuters) – Climate-related weather events are costing American households, businesses and insurers billions of dollars in losses, and there is no sign that they will ease up, the U.S. Treasury’s top climate official told Reuters on Thursday.

Climate counselor John Morton said Treasury’s Federal Insurance Office (FIO) https://www.federalregister.gov/documents/2021/08/31/2021-18713/federal-insurance-office-request-for-information-on-the-insurance-sector-and-climate-related was seeking public input to better understand and assess the insurance-related risks posed by climate-related weather events such Hurricane Ida.

Hurricane Ida, https://www.reuters.com/business/energy/oil-losses-hurricane-ida-rank-among-worst-16-years-2021-09-07 which made landfall on Aug. 29 with 150 mile-per-hour (240 kph) winds, cutting most U.S. offshore oil and gas production for more than a week and damaging platforms and onshore support facilities. It was among the most costly hurricanes since back-to-back storms in 2005 cut output for months, according to the latest data and historical records.

“Just last year, climate-related weather events resulted in nearly $120 billion in losses, and … close to $50 billion of that were uninsured losses,” Morton said in an interview.

“We’re seeing not only the insurance sector take an increasingly severe and regular hit, but we’re seeing American households, American small businesses be affected at significant levels,” he said. “And there’s no reason to expect those losses are going to stop.”

The Federal Insurance Office will accept input for 75 days and then come up with recommendations for better pricing the risks that climate change posed to insured properties and activities, Morton said.

“The question is, how do we … better understand and begin to price the risk inherent in the underlying activities,” he said.

In its Aug. 31 request for information, it cited a dramatic increase in the frequency and severity of climate-related disasters, and said they had resulted in growing economic losses and financial risk.

“The increased frequency and severity of climate-related disasters, as well as the magnitude of associated insured losses, highlight the significance of these climate-related financial risks and the role of insurers in responding to them,” it said, adding that some consumers are increasingly unable to find affordable property insurance in certain markets.

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