Climate change damage becoming increasingly uninsurable, AFM warns
Many damages resulting from climate change cannot be insured, while the cost of claims will increase sharply in the coming years. The Netherlands Authority for the Financial Markets (AFM) warns against this. These damages include subsidence of houses as a result of prolonged drought or damage after flooding.
The regulator believes that the government and the insurers should look for solutions to this problem together. Insurers must also make clear to their customers which damages will and will not be reimbursed.
After the floods in Limburg earlier this year, the damage was enormous. In some cases, entrepreneurs were not aware that their insurance did not cover this. The government established a compensation fund to help citizens and businesses in the affected area.
Climate change is increasing the risk of extreme weather. The damage caused by floods in the first ten years of this century in the European Union averaged 4 billion euros per year. According to estimates, this will rise to 24 billion euros per year by 2050.
The AFM cites subsidence as an example. In 2016, four insurers still covered this risk. Since last year, none did so anymore, while the Netherlands is increasingly faced with prolonged periods of drought and subsidence risks. "An estimated 800,000 homes are at risk of subsidence and collapse if the groundwater level falls," the regulator writes in a statement. The financial consequences of this can be enormous, with an average damage amount of 64,000 euros. The AFM advises consumers in risk areas to consider this in their financial planning when buying a house there.
The UN climate panel IPCC reported earlier this year that the earth could warm by 1.5 degrees in the next two decades if drastic measures are not taken to limit greenhouse gas emissions. The authors of the report concluded that humanity is undeniably responsible for global warming. In the Netherlands, the sea level on the Dutch coast may rise faster than previously expected, and the risk of heavy downpours in the summer will increase.
Consulting and engineering firm Arcadis is already benefiting from companies' projects to combat climate change. The firm achieved a net turnover of 636 million euros in the third quarter, 5 percent more than the same period last year.
According to CEO Peter Oosterveer, Arcadis is hired for projects in the field of energy transition or making assets such as business premises more sustainable. Arcadis also contributes to smart mobility solutions and the greening of places and areas. Because of the increasing demand for sustainability, Arcadis sees a positive future for the company.
Reporting by ANP.