Transcript:
After a wildfire or hurricane, insurance companies may be flooded with claims from homeowners.
Quigley: “These types of events can impact thousands of insurance policyholders simultaneously, and that, because of the large-scale nature of them, put an insurance company at risk of insolvency.”
Michael Quigley is with Munich Re, a company that offers what’s known as “reinsurance.”
Reinsurance is insurance for insurance companies, and helps them stay afloat if a major disaster forces them to pay out many claims at once.
Quigley: “Just as you or I would purchase homeowner’s insurance to protect against a catastrophic fire or natural disaster that could destroy our home, so too does an insurance company protect itself against such severe catastrophic events.”
But climate change is making fires and hurricanes more destructive, which puts more pressure on reinsurance companies. In response, some are raising their rates.
So to help control costs and keep people safe, Quigley stresses the importance of making homes more resilient to disasters.
Quigley: “We need to focus on implementing prevention measures like better building codes and land use planning to lower those losses and to keep insurance premiums more affordable.”
Reporting credit: Ethan Freedman / ChavoBart Digital Media
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