CLIMATE CHANGE AND HEALTH INSURANCE

Weather changes to the extreme in the winter and summer. Temperatures are on the rise day by day. The insurance industry suffers on account of huge catastrophes caused by climate change in many parts of the world. The concerns over climate risks and cyber risks loom large which leads to predicting the future forecast pessimistically. The effects of climate change causing catastrophes like hurricanes, windstorm, tsunami, heatwaves, floods etc. are concerns of the property insurers. Because catastrophes are happening more frequently with high severity than every other previous year, reinsurance demand is expected to remain strong. The high prices have attracted more capital and however the rate increase was slow below 10%. Had the Baltimore loss and losses due to flood in Dubai and Oman happened much before April 24 renewal, the rate increase might have been much higher.

Does the effect of climate change in commercial insurance mask the effect of climate change in health insurance? Currently, the impact of climate change on health insurers is not significant. Climate change presents significant challenges for the health insurance industry, requiring a strategic reassessment of risk management, coverage policies, and business models. We also have not studied the same with enough data to support it.  Recently the Geneva Association and Wellcome published a report providing a framework for understanding how climate change impact people’s health. The report mentions that the health impacts due to climate change are often overlooked. The report further says that various risks ranging from respiratory issues due to wildfires and poor air quality, vector -borne diseases, strokes from heatwaves to chronic risks such as spread of disease-carrying insects due to temperature shifts need consideration. They say the climate crisis itself has become a menta health issue. The frequency of extreme weather events and the associated stress and trauma can lead to an increase in mental health issues among affected populations. Death due to heat wave is on the rise in India. The effects of climate change necessitate health insurers to adapt by reassessing risk assessments, premium structures, and coverage policies. It is a must for them to invest in preventive measures and collaborate with public health entities to mitigate risks associated with climate change.

The companies are adopting cohort pricing in health insurance without benefiting senior citizens and elders who have been insuring for long years without making any claims. Governments should implement new regulations requiring insurers to cover certain climate-related health risks or to contribute to national adaptation and mitigation strategies. The health insurers need to adjust their policies and practices in ways that could impact their profitability and operational models. The Regulator has recently announced some path breaking changes in Health Regulation. The maximum entry age for availing health insurance has been removed. Earlier the maximum entry age was 65. The removal of this means that people of any age can look to buy a Health Insurance Policy. Similarly, the Regulator has encouraged the Insurers to develop health products to cover people suffering from specific diseases like cancer, AIDS, MS etc. In the absence of any specific guidelines from the Regulator, even if such products are developed, the price may be very prohibitive, making it unaffordable. The Regulator should oversee that such products are available at an affordable premium. The coverage for OPD treatment with some sub-limit should be made available.

Some of the common diseases that spread during summer like smallpox, chickenpox and measles have been nearly eradicated. Warm weather activities and conditions may also contribute to diarrhea, heat stroke, and enterovirus, the most common group of summer infections. The climate change affects senior citizens more than the younger people as they have lesser immunity. The census which was planned for 2021 was delayed due to Covid pandemic. However, in India it is estimated around 7 to 8% of the population falls within the age bracket of 65 years and above. So, it is necessary for the insurance industry to rise up to this occasion to develop new health products at affordable cost for senior citizens.