Insurers predict the frequency and sustainability of climate change-related litigation could soon become a significant issue.
But there are ways for risk managers to pursue coverage effectively when their businesses are faced with climate-related claims, such as quantifying risk, working on a claims strategy and hiring experts, said industry observers in a panel discussion at the RIMS Canada Conference in Halifax.
What claimants should avoid doing is neglecting to put insurers on notice, said panellists.
“As lawsuits come from climate change liabilities, so too will the insurance coverage disputes as it becomes more and more financially necessary to pursue coverage when there’s denial,” said Pamela Hans, insurance recovery attorney at Anderson Kill. “Policyholders are waiting in the wings to see how some of these global warming lawsuits evolve over time.”
Liability stemming from climate change will outstrip asbestos-related claims, Swiss Re forecast in a 2009 report that was referenced by the panellists, who said it outlined the pressing nature of this snowballing risk.
In that light, there are steps claimants should take before a global warming loss — and quantifying risk should be among the first, said Hans.
“Looking at quantifying your risk before there’s a loss, so you understand what you’re potentially dealing with and whether there’s coverage or not at the front end,” she said.
“[Don’t just ask] do we have a risk of fire, flood, hurricane, oil spill, chemical spill?” said Hans, “but [ask] what are the dollars attached to that? What would our business-interruption loss be if there was a hurricane? How would we quantify that?”
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