As climate change becomes an increasingly pressing issue, governments around the world are beginning to take action to protect their citizens and their economies. According to a New Zealand government minister, increasing individual wealth could be key to helping individuals and the economy absorb the impact.
The Minister of Commerce and Consumer affairs, Andrew Bayly, said that making individuals wealthier will help because they can better afford insurance, helping to cushion any blow. However, those without insurance or other means to adjust are likely to be among the worst impacted.
Bayly also pointed to the surge in severe weather events in the last few years, saying that the country’s insurance sector will play an increasingly important role over the coming years and decades.
Minister Bayly made the comments while speaking at the council of New Zealand’s yearly conference. Bayly was introduced by outgoing CEO Tim Grafton, who added that insurance will become increasingly expensive as insurers have to pay out more.
Grafton add that some Kiwis are already at the stage where they can no longer afford insurance, leaving them exposed. He also went on to say that action should be taken sooner rather than later or the country could become less appealing to overseas markets.
When asked what steps will be taken to help protect citizens who are under-insured, Bayly replied that there was little the government could do. However, He was a little critical of the government’s approach, saying there should be more focus on building infrastructure to limit the damage instead of encouraging Kiwis to get insured.
One of the key issues with affordable insurance is that it reduces the cash flow and capital of the insurer, leaving them exposed to going under. Bayly’s suggestion of increasing Kiwi’s wealth will help them get the protection they need, while also ensuring insures remain in business.
Bayly also went on to say that insurance costs are soaring partly because of a lack of communication regarding the country’s plans for climate change. He added that clear communication and reassurances could help give insurers enough confidence to steady or drop their premiums.
With each year apparently bringing more severe weather than the previous year, citizens in New Zealand and globally are beginning to take notice and start preparing. Not only will individuals need to prepare, but also governments and industries, particularly the insurance industry.
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