The European Insurance and Occupational Pensions Authority published a report identifying extreme heat as the leading climate related liability risk for life and health insurers and occupational pension providers. Current financial effects remain limited because of factors including broad public healthcare coverage and portfolio diversification, but the risks are expected to grow as heatwaves become more frequent, intense and prolonged. Using an illustrative framework based on hazard, vulnerability and exposure, the report projects the greatest effects for medical expense, income protection and workers’ compensation insurance, as well as similar-to-life health insurance and other non-participating life insurance. The impact will vary by product and portfolio because climate change affects mortality, morbidity and longevity differently. Products exposed to mortality and health risks could reduce insurers’ own funds, although longevity adjustments may partially offset those effects. EIOPA encouraged insurers to incorporate these emerging risks into climate risk assessments, including direct effects and wider indirect macroeconomic consequences. Heatwaves have caused about 300,000 deaths in Europe since 2000, representing roughly 97% of fatalities linked to extreme weather and climate events, while wildfires and the potential spread of vector-borne diseases could add to health-related exposures.
European Insurance and Occupational Pensions Authority identifies extreme heat as leading climate liability risk for insurers and pension providers
The European Insurance and Occupational Pensions Authority identified extreme heat as the leading climate related liability risk for life and health insurers and occupational pension providers. Current financial effects are limited, but exposure is expected to rise and could affect mortality, morbidity and longevity assumptions across several insurance lines. EIOPA urged insurers to reflect direct and indirect effects in their climate risk assessments.