Kasım Yılmaz, General Manager of Koru Sigorta, stated that climate change has become a factor that radically transforms the insurance industry. “This transformation requires a joint struggle involving not only insurance companies, but also governments, the business world and individuals,” Yılmaz said.
Impacts of the Climate Crisis on the Insurance Industry
According to Kasım Yılmaz, climate change has become a major crisis affecting not only scientists but all sectors of the global economy. The insurance industry has also entered a period of significant transformation due to increasing natural disasters. In recent years, events such as hurricanes, floods, forest fires and droughts have become both more frequent and more devastating.
For example, in the US, insured losses due to natural disasters in 2023 exceeded $100 billion. In Europe, major floods in Germany and Belgium in 2021 caused billions of dollars in losses, while in Turkey , floods in the Black Sea and forest fires in the Mediterranean and Aegean increase insurance costs. Yılmaz emphasized that the biggest problem is the continuous increase in damage costs and whether premiums can balance this rise. “Excessively high premiums may reduce the number of people taking out insurance, but keeping them low also puts companies’ profitability at risk.”
Measures Taken by Insurance Companies
Kasım Yılmaz stated that the insurance industry has developed various strategies to offset the impacts of climate change. These strategies are as follows:
- Updating risk analysis models: More accurate analyses are made using artificial intelligence, big data and satellite imaging technologies.
- Increasing insurance premiums: Premium rates are being raised, especially in high-risk regions. In the US, home insurance premiums in states such as Florida and California have increased by more than 30% in the last five years.
- Narrowing policy coverage: Some policies in high-risk areas are limiting flood, hurricane and fire coverage.
- Changing investment strategies: Investments in fossil fuels are declining, while renewable energy projects are on the rise.
- Climate resilience incentives: Sustainable insurance is supported by lower premiums for durable and environmentally friendly buildings.
Collaboration is a Must!
Yılmaz emphasized that the cooperation of governments and individuals is critical for the insurance industry to adapt to climate change. The steps to be taken in this process are as follows:
- The role of governments: New regulations should be developed to support the insurance sector.
- Green insurance practices: Sustainable solutions such as green buildings and electric vehicles should be encouraged.
- Efforts to reduce disaster risks: More resilient cities should be built with projects supported by the insurance industry.
The Future Green Insurance
Kasım Yılmaz stated that it is inevitable to develop solutions to reduce environmental risks in order for the insurance industry to achieve a sustainable structure. “Although this transformation brings additional costs for insurers, it also offers new opportunities. Insuring a safer and more resilient future will only be possible with the cooperation of all stakeholders.”
