Climate change's impacts on life and health insurance

Climate change’s health impacts

Climate change will affect public health and lifespan over the long term. Its direct impacts include increased mortality and wider spread of vector-borne diseases due to extreme heat (see table). Its indirect impacts include more cases of diseases due to air pollution or degradation of water quality and even mental health impacts from factors such as job losses and forced migration. The WHO projects that climate change will result in 250,000 additional deaths per year from causes such as malnutrition, malaria, diarrhea and heat stress between 2030 and 2050.

In the insurance industry, climate change will affect health insurance claims and whole life insurance payouts. Life and health insurers will consequently have to take climate effects into account when designing products, but their diversity in terms of product lines, geographies and local insurance penetration rates means that climate change impacts must be assessed not only on the actuarial level but also on a company-by-company basis. Additionally, climate change could affect even sales strategies given the risk of it causing economic deterioration that could hurt insurance sales.

Because impacts on morbidity and mortality rates will affect life and health insurance underwriting, regulators also have started to assess climate-related risks. In 2018, the International Association of Insurance Supervisors (IAIS) published a paper that cited changes in mortality profiles and demographics as physical risks of climate change that are facing life and health insurers. The paper also highlighted the risk of extreme heat exacerbating pre-existing health conditions.