In a recent report, Ceres calls for the consideration of a federal climate risk reinsurance program as part of its 10-point plan to help the U.S. insurance industry build resilience against increasing climate disasters.
As climate change accelerates, causing more frequent and severe weather events, the insurance industry faces significant challenges. Rising premiums, market withdrawals, and solvency concerns highlight the urgent need to rethink the traditional insurance model.
To address this, Ceres presents a 10-point plan offering a new vision for how the industry can navigate these challenges. The plan includes recommendations for insurance companies, regulators, investors, and governments.
Ceres emphasises the need for a coordinated approach to address rising climate risks and build a more resilient and sustainable insurance industry.
A key proposal in the plan is the consideration of a federal climate risk reinsurance program. This would involve creating a commission to assess the feasibility of such a program, which could provide stability during extreme climate events.
Ceres argues that a well-designed federal backstop could stabilise insurance markets while preserving private sector innovation in climate risk management.
Such a program would offer protection against catastrophic events, encouraging insurers to maintain coverage in high-risk areas while pricing for more common risks. This would address market withdrawals and affordability issues while supporting the long-term sustainability of private insurance markets.
Other recommendations in the plan include supporting mandatory climate risk disclosures, using predictive climate modelling and AI, and supporting innovative insurance products, among others.
Ceres concludes its report by stating, “The path forward requires unprecedented collaboration among insurers, regulators, policymakers, and communities. Through decisive action and innovation, insurers can help build a more resilient, equitable, and sustainable future-one that protects both their business model and the communities they serve.”
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