In a recent interview between Tony of COVER Magazine and Bill Klehm, the chairman, and CEO of eBliss, a critical issue was brought to light – insurers blacklisting areas in the USA due to climate impact.
The discussion shed light on the challenges posed by climate change, the evolving risk landscape, and the role of government in shaping a sustainable future. While the conversation centered on the United States, there are valuable lessons that South Africa can glean from this situation.
Bill Klehm, drawing on his extensive experience and insights, highlighted the intricate web of factors driving insurers to make tough decisions like State Farm’s choice to halt new Homeowners insurance policies in California. Climate change, which brings about extreme events like fires and floods, has fundamentally altered the risk profile that insurers must navigate. These shifts have implications not only for shareholders but also for consumers who may find themselves unable to access insurance in the regions most affected by these changes.
A central concern raised by Bill is the lack of proactive government intervention to create an environment conducive to managing these risks. Governments have a responsibility to collaborate with the insurance industry and consumers to ensure that a sustainable framework is established. Klehm pointed out that this is not about advocating for a socialized system of insurance but rather about forging a partnership that empowers insurance companies to diversify their risks and pool resources across broader markets.
The conversation delved into the importance of crafting a revised framework that aligns the interests of insurers, the government, and consumers. This requires strategic cooperation to encourage investments that address the evolving risk landscape brought about by climate change. In this context, Bill cited the historic example of the Apollo program, where government and industry partnered to achieve the monumental goal of landing humans on the moon within a decade. Such a collaborative approach, combining innovation and investment, could be harnessed to address climate-related challenges.
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Tony highlighted the interconnected nature of the issue, particularly when it comes to co-insurance – a practice where multiple insurers share the same risk. The complexity arising from co-insurance underscores the need for a well-orchestrated approach that aligns the efforts of insurers and the government to create a sustainable long-term solution.
Drawing parallels to South Africa, the interview underscores the vital role that government plays in ensuring the sustainability of regions and urban areas. Neglecting critical issues such as crime and failing to provide an enabling environment can lead to a downward spiral, causing disrepair and disillusionment among businesses and residents. Just as government leadership is crucial for revitalizing areas plagued by crime, it’s equally essential to address the challenges posed by climate change and its impacts on insurance and housing in South Africa.
The interview concluded with a call to action – a call for a unified effort that transcends individual interests and puts the well-being of citizens and the planet at the forefront. By fostering collaboration between government, industry, and consumers, South Africa can learn from the experiences of other regions grappling with the effects of climate change. Governments must take the lead in establishing the frameworks and incentives needed to navigate the evolving risk landscape effectively.
As we navigate an era marked by increasing climate-related challenges, this conversation serves as a timely reminder that solutions require collective action. South Africa, like other nations, stands at a crossroads where innovative partnerships and a renewed commitment to sustainability can shape a brighter and more secure future for all.
It is up to policymakers, industry leaders, and engaged citizens to heed this call and work together toward a more resilient and sustainable society.