Climate change is making Vermont both warmer and wetter, and leading to an increase in severe weather that makes property damage more likely, according to a report by Vermont's Department of Financial Regulation (DFR).
The report was completed in conjunction with Northview Weather, a Vermont weather modeling and forecasting firm, and based on research Northview previously conducted.
Hailstorms accounted for the most property damage in terms of total loss, followed by gradient wind and thunderstorms. These types of weather events tend to increase in a warmer, wetter environment.
The report predicted these climate trends will continue over at least the next three decades and will cause rising homeowner and auto insurance rates in Vermont, the report said.
Commissioner Michael Pieciak said: “Vermont currently has some of the lowest home and auto insurance rates in the country and it is in the collective interest of industry and consumers to maintain that in the future.”
Pieciak highlighted the role financial regulators can play in helping reduce and mitigate the impacts of climate change on Americans. “The financial entities we regulate collectively hold over $220 billion in assets that could both be vulnerable to climate risks and used to encourage greener practices that will reduce risk for consumers,” he explained.
The DFR has committed to advocate to the US Securities and Exchange Commission in support of mandatory climate risk disclosures for publicly traded companies. It will also annually administer the Insurer Climate Risk Disclosure Survey, developed by the National Association of Insurance Commissioners, to domestic insurance companies, to help assess the systemic risk presented by climate change.
It will also develop guidance to address climate-related financial risks, which will encourage or require regulated insurance companies to evaluate potential climate-related financial exposure by conducting stress tests and scenario analyses. This will incorporate climate change into enterprise risk management processes, and assess and manage climate risk exposure in investments.
The DFR said it expects to encourage companies to assess their investments in carbon-intensive sectors and to evaluate whether such investments are consistent with their risk management goals. It will encourage the development of innovative insurance products to tackle climate change risk and promote incentives that encourage energy efficiency.
It will also apply to join the Sustainable Insurance Forum this year to find solutions to mitigate the impact of climate change.
Department of Financial Regulation, Northview Weather, Michael Pieciak, Vermont, National Association of Insurance Commissioners