The Department of Financial Regulation has issued a report indicating that insurance rates for properties could be going up, and that concerns about global warming are the culprit.
“The report found that climate trends are making Vermont’s climate warmer and wetter which is also leading to an increase in severe weather more likely to cause greater property damage,” the department said in a statement this week. “Specifically, hailstorms accounted for the most property damage in terms of total loss, followed by gradient wind and thunderstorms. These types of weather events tend to increase in a warmer, wetter environment.”
Insurance companies are experiencing increased losses due to climate change, according to the department, and it has calculated 39 percent is due to increased hail storms, 31 percent from increased wind, and 13 percent from more thunderstorms.
The department forecasts that trends will go on for three decades, and increased severe weather and the subsequent property damages mean that Vermonters “could experience an indirect impact through rising homeowner and auto insurance rates.”
DFR Commissioner Michael Pieciak said financial regulators can play a part in fighting global warming using their clients’ money.
“Financial regulators have an important role to play in helping reduce and mitigate the impacts of climate change on Americans,” Pieciak said. “The financial entities we regulate collectively hold over $220 billion in assets that could both be vulnerable to climate risks and used to encourage greener practices that will reduce risk for consumers.”
DFR will do its part to ensure that public resources are committed to fighting off anticipated severe weather events. First, it will join the Sustainable Insurance Forum, which is “an international group of insurance regulators committed to sharing information and solutions that would help reduce and mitigate the impacts related to climate change.”
Other actions include that the department will support of “mandatory climate risk disclosures for publicly traded companies,” and they want each insurance company to fill out an “Insurer Climate Risk Disclosure Survey” to assess the systemic risk presented by climate change.
It continues that they want the companies to “encourage or require regulated insurance companies to evaluate potential climate-related financial exposure by conducting stress tests and scenario analyses, incorporate climate change into enterprise risk management processes, and assess and manage climate risk exposure in investments.”
Another action item is to “Encourage and promote the use of incentives for businesses, farms, and consumers to utilize energy-efficient building methods in both new construction and retrofitting existing structures, install energy-efficient appliances and air-handling systems, and transition to renewable energy.”
Finally, DFR will “provide written and electronic resources to Vermont consumers on climate-related risks and insurance policy limitations.”
Pieciak said that Vermont is currently at the low-end when it comes to national insurance rates.
“Vermont currently has some of the lowest home and auto insurance rates in the country and it is in the collective interest of industry and consumers to maintain that in the future,” he said.