The impact of Climate Change on your insurance rates

In our event linking Climate Change to Insurance, Eric Monkman of Monkman, Gracie & Johnson Insurance Brokers told his audience of about 30 people at Trinity United Church Hall Tuesday evening that insurance claims from extreme weather have climbed dramatically over the last few years and will continue to increase as climate change worsens. In the Peterborough area, this is particularly a problem for people living in flood-prone areas, especially in parts of the K9J area code.

“As extreme weather events become increasingly common, insurers will have to recover their costs by raising premiums, or even cancelling insurance entirely for high-risk coverage”

The 2004 Peterborough Flood resulted in insurance claims of more than $100 million, which does not include the costs associated with disposal of the associated garbage, disruption of business, days off work and the toll on people’s mental health. The average claim for a flooded home in the Peterborough Flood was $43,000. As a result, some homes will be limited in the future to a maximum of $25,000 for flood insurance. Monkman’s firm had 400 claims over the single night of the flood.

When asked what determines home insurance rates, Monkman said that it was a combination of location, frequency of claims and, in some cases the insured person’s credit score. To explain the latter, he said that a poor score correlates statistically to higher risk. While credit scores have been used to help set rates in the US for years, it is now an increasingly common tool in Canada, as well. The result is that economically disadvantaged people take a bigger financial hit  from extreme weather events than wealthier people.

Damage related to climate change is not just a local phenomenon. The devastating 2016 Fort McMurray fire resulted in $9.9 billion in damages, and damage from extreme weather cost $300 billion globally in 2017. California has lost over 8000 buildings this year alone, with rebuilding costs estimated at $18 billion.

You can read the full text of Eric’s talk here.

Kate Grierson, an Al Gore-trained climate change communicator, also provided a brief update on the global picture of climate change in 2018, including a discussion of the latest IPCC report showing that the world must stay below 1.5 degrees Celsius of warming to avoid the catastrophic effects of climate change. This will mean having to reduce planet-wide greenhouse gas emissions by about 50 percent in the next 12 years. The earth has already warmed by 1 C.

Kate pointed out that money spent now to reduce greenhouse gas emissions reaps much larger future benefits in reduced extreme-weather damage. She concluded by suggesting that all of us can help in many ways. Vote for candidates who will act, join local organizations that are working to make a difference, and maybe most important, talk about climate change to your friends and colleagues using the approach suggested here.

You can contact Kate to arrange a presentation for your group by email here.

Here are links to some of the web sites referenced during the evening.

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