How insurers can take on the climate-driven health crisis
The impact of climate change is well documented - 404 natural catastrophic events occurred in 2022 (the most recent year for which complete data is available), representing an alarming 22% increase over the annual average from 2001 through 2020.
More recently, during the summer of 2023, almost half of the world’s population experienced extreme heat for 30 days or more. Extreme heat overcomes the body’s natural defence mechanisms, increasing people’s risk of dying from cardiovascular disease by 12% - a rate that is expected to escalate as the planet continues to warm. It is believed to be leading cause of heat-related fatalities.
According to the UN Environment Programme air pollution leads to 7 million premature deaths a year, with most people breathing air that is polluted above the WHO’s safe levels. In 2022, the World Bank highlighted the link between climate change and air pollution in its call to measure, monitor, and disseminate air quality data to the public.
Beyond its impact on individuals, global warming puts a strain on healthcare providers, placing the life and health insurance industry front and centre in coping with the resulting health effects. Demand for care spikes in the immediate aftermath of climate change events.
While global warming has a direct impact on the health care system through more frequent and severe illness and injury, disaster-related damage to key facilities, labour shortages, and interruptions to the supply of drugs and medical equipment. Health insurers must deal with more claims, higher overall costs, and raised costs per claim.
Additionally, climate change tends to increase both short- and long-term inaccessibility to health care, heightening policymaker, and regulator attention to rising health inequity and the industry’s response to it.
To serve customers better and to maintain its own health, the life and health insurance industry needs to get ahead of the problem. Doing so will enable it to lead the response to climate change’s impact on individual health and well-being and on the resilience of the health care ecosystem.
Four sets of initiatives are central to this task:
Understanding the health impacts of climate change: so far, property and casualty insurers have borne the brunt of climate change, while life and health companies have not had to adapt as quickly. This situation is changing, but limited understanding of the direct impacts of climate change events on insurers’ portfolios adds to the complexity of companies’ risk assessments, mortality analyses, and tailored protection provisions.
Promoting prevention measures and response plans: insurers have successfully created programmes to incentivise customers to live healthier lives through more exercise, better diets, and regular health checks. They can apply a similar strategy to climate-related health issues, with programmes that include personalised notifications, education campaigns, and apps with live warnings and information.
Developing innovative insurance products and procedures: health insurers need to rethink their core businesses in the context of climate change, developing products and customer-related procedures to address climate risks. Examples include climate-specific insurance products or temporary waivers; wider coverage for diseases and addressing underserved populations.
Establishing new services to diversify revenue streams by providing additional services to client along the entire health value chain. Going forward, services that broaden access to healthcare for climate-related illnesses or conditions are likely to be highly valued.
Climate change is already having an impact on life and health insurers’ portfolios. By adapting to the changing environment and developing innovative solutions to deal with the challenges it presents, insurers can protect—and even expand—their businesses while helping their clients live healthier lives and receive higher-quality care from a more resilient healthcare system.
