Insurers rally on extreme weather threats

Insurers rally on extreme weather threats | Insurance Business Canada

Catastrophe & Flood

Insurers rally on extreme weather threats

Insurance leaders from major Commonwealth nations are pressing for action at this week’s government meeting

Catastrophe & Flood

By
Rod Bolivar

Insurance organizations from the United Kingdom, Canada, Australia, and New Zealand are urging Commonwealth heads of government to prioritize the issue of extreme weather and its growing economic and social impacts at the Commonwealth Heads of Government Meeting (CHOGM) in Samoa.

The Association of British Insurers (ABI), Insurance Bureau of Canada (IBC), Insurance Council of Australia (ICA), and Insurance Council of New Zealand (ICNZ) have jointly requested their respective prime ministers discuss these concerns during the Commonwealth Business Forum on October 23 and 24.

The request follows the Global Insurance Protection Gap Forum, which took place in Sydney, Australia, on October 18. The forum was attended by leaders from the ABI, IBC, ICA, and ICNZ, alongside insurers, government representatives, and regulators.

Together, these organizations represent insurers with a combined gross annual premium of approximately $200 billion. They play a significant role in supporting individuals, businesses, and communities to recover from unexpected events while mitigating risks across their respective economies.

The forum highlighted several critical issues. As extreme weather events become more frequent and severe, and as populations grow, the insurance protection gap is expected to widen. In particular, the risk of flooding is increasingly affecting more areas, putting more homes at risk. Governments and insurers, according to the forum, must collaborate to develop a shared understanding of current and future hazard risks and focus on reducing vulnerabilities in their economies. A key point raised was the need to stop building homes in high-risk areas, which can lock in further risk.

Long-term decision making

Hannah Gurga, director general of ABI, emphasized the urgent need for long-term decision-making, particularly in the UK, where a review of the planning system is underway. She pointed to the success of Flood Re, which has made insurance accessible to hundreds of thousands of homes in the UK, but stressed that additional measures, including changes to building practices, are necessary to address future challenges.

In Canada, Celyeste Power, president and CEO of the IBC, referred to the recent string of natural disasters, including floods, wildfires, and a hailstorm, which led to $7 billion in insured losses. She highlighted that these events are part of a broader pattern of worsening extreme weather across the country. Power noted that Canada is not alone in facing these challenges, and she echoed calls for action to mitigate growing physical and financial risks.

Andrew Hall, CEO of the ICA, discussed how the increasing intensity of natural disasters, combined with continued development in high-risk areas, is exacerbating the insurance protection gap. Hall called for improved planning and building standards, as well as greater investment in public infrastructure to protect communities and maintain insurance affordability.

Kris Faafoi, CEO of ICNZ, noted that climate change presents shared challenges for Commonwealth nations, and emphasized the importance of collaborative efforts to reduce risks from natural hazards. He highlighted New Zealand’s recent experience with severe weather events, underscoring the need for joint action on policy and disaster response.

The insurance leaders concluded by expressing their willingness to work with governments and other stakeholders to safeguard communities and strengthen resilience.

What are your thoughts on the role of insurers and government in addressing the growing risks of extreme weather? Share your comments below.