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Banks face climate stress as home insurance crisis widens
The annual bill for cleaning up natural disasters caused by climate change will more than double over the next two decades, drastically worsening insurance affordability and amplifying risks for banks and the broader financial system, the prudential regulator warns.
A widening insurance “protection gap” – the difference between the amount of insurance in place and the actual cost of recovery from a disaster – will create credit risk for banks which use residential property as the security for loans.
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