The risk of a lifetime: mapping the impact of climate change on life and health risks

Climate change affects human health through many channels, the biggest drivers of which are expected to be extreme heat, air pollution, and increased exposure to infectious disease spread by non-human vectors. Consequently, increased morbidity of non-communicable diseases, especially cardiovascular diseases, respiratory illnesses and cancer, and increased spread and emergence of tropical infectious diseases, is expected. This will likely impact clinically vulnerable individuals with pre-existing comorbidities, or groups such as the elderly, and the disabled, the most. Increasingly frail, ageing populations could push mortality rates higher. The extent of an individual’s direct exposure to risk factors and access to mitigation tools will also determine their overall risk.

The effects of these are expected to be gradual and incremental over the time horizon we consider. Certain trends, such as extreme heat and the pace of technological change to mitigate climate risks, can be estimated with some accuracy. However, the trajectories of air pollution and infectious diseases are much more uncertain paths with a wide range of possible outcomes. Future mortality from vector-borne disease, for example, will be heavily influenced by emergence of new pathogens from human-animal interactions. Mitigation tools such as cooling, hydration and air filtration can greatly reduce health risks, but risk interdependence is a key consideration given the reliance on electricity, which could increase warming and air pollution through fossil fuel usage.

For L&H insurance, the key focus of climate change risk will be how exposure to prevailing climate and environmental conditions throughout a person’s lifetime affects their health. While the world may succeed in reducing the impact of climate change in decades to come, the health impacts from heat or polluted air at current levels are accruing now and are unlikely to be reversible. To manage this, L&H insurers are expected to exert strong underwriting discipline and allow for adjustment of rates as incremental risks develop. Increased incidence of infectious disease poses a specific threat, given the universal nature of the risk exposure to a population.

Consumers more exposed to climate risk at present are often those less served by L&H insurance, but a growing middle class in emerging markets hints at potential shifts in buying behaviour as people seek more protection. This suggests a large potential growth in demand for insurance, as consumers and insurers seek to close the protection gap. L&H insurers have an opportunity to inform and incentivise policyholders on how to adapt to changing climatic conditions. Fragmented, sparse data hinders understanding of the impacts and interdependencies, and the industry would benefit from bridging the data gap.