CLIMATE change could come to dominate insurance premiums in much the same way auto eclipsed fire risk decades ago, the ceo of the Institute for Catastrophic Loss Reduction says.
Speaking at a June broker event in Toronto sponsored by Gore Mutual, Paul Kovacs said the science is clear on the increasing frequency and severity of weather events, and within the next three decades that could change the kind of insurance Canadians will be buying.
“It is my opinion that in 25 to 30 years our industry will collect more premium and pay more claims for weather related events — perhaps three times what we are collecting in auto,” he said.
He said there are three major elements becoming clear that will influence how the insurance industry can deal with shifting priorities, one of which is government involvement.
“In fire and auto we have relationships with government . . . and there is room for the government to be involved working with our industry,” he said. “That has just started and we don’t really know . . . how (governments’ intentions) fit into our business.”
Also, insurers and brokers will have to navigate complex terrain in getting the right products to clients and communicating proper mitigation techniques.
“In the early years of fire and auto insurance there was a very large (product) difference from one insurance carrier to another,” Mr. Kovacs said.
“We are seeing a bit of that right now and you are going to see more of that, which is going to make it harder to be a broker when insurance is a little different.
“This is all part of sorting this out and it will be that way for a while.”
(More coverage of the Gore Mutual broker event is presented in the June 25 weekly edition of Thompson’s. To subscribe, please choose the ‘Subscribe’ tab on our main page or email firstname.lastname@example.org for more info).