As the government weighs its response to climate change, it is hearing from the insurance industry. This seems fitting considering that changes in climate could impact many insurance operations, including investment decisions, claims and underwriting practices.
Sean Dilweg, insurance commissioner of Wisconsin, testified on behalf of the National Association of Insurance Commissioners before the U.S. Senate Committee on Commerce, Science and Transportation. “Insurance regulators need to recognize that the risk of weather-related losses on real estate is complex,” he said. “It can arise not only from declining asset values, but also the costs of fortification, physical damage to structures, and associated business interruption.”
Dilweg said that insurance regulators should help mitigate the impact that climate change will have on insurance. “It is imperative regulators examine how climate change will impact the investments insurers hold and establish applicable regulatory standards for the investment practices of insurers,” he said, adding that there needs to be incentives for policyholders to engage in practices that will limit losses.
Another area where Dilweg stressed cooperation between the government and industry is on the uniformity of building codes. “Insurers in coastal regions are often leading proponents of better land use policies and mitigation efforts, such as roof strapping and storm shutters,” he said. “Likewise, insurers can help mitigate the impact of climate change by promoting adoption and vigorous enforcement of uniform building codes.”
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