Climate Change Is Breaking Insurance. Here's How Tech Could Save It. - The Wall Street Journal
Climate Change Is Breaking Insurance. Here’s How Tech Could Save It. - WSJ
If floodwaters outside a warehouse in Freeport, Texas, owned by private investment firm Postlane Partners rise to 8 inches, an internet-connected sensor will trigger an automatic $3 million payment from an insurance company, a startup called FloodFlash. If the waters rise to 16 inches, the payment will also rise—to $5 million.
This type of policy, called parametric insurance, works like a bet. It has a defined payout, which limits the liability of the insurer. And it comes from a new breed of insurance company, stepping in to shoulder risks that traditional insurers can’t—or won’t—take on, because climate change has made more typical kinds of coverage unprofitable.
Copyright ©2023 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
What to Read Next
- TurboTax: Save up to $15 with TurboTax coupon 2023
- The Motley Fool: Epic Bundle - 3x Expert Stock Recommendations
- H&R Block Tax: Get 20% off H&R Block tax software products
- Top Resume: Top Resume Coupon: 10% Off professional resume writing
- eBay: Unlock 10% off orders $50+ with eBay promo code
- Groupon: Groupon coupon code: Extra $10 off all home products
Related Knowledge Center: Climate economics
Climate change is now a driver of the world’s economy. The impact is profound:
- Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
- Vulnerable communities are increasing climate-related investments, hardening infrastructure and taking other protective measures.
- Investment in carbon capture and storage technologies is increasingly rapidly.
- Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases.
On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”