It's no secret that climate change is already affecting insurance markets in places like Florida — but the health insurance industry could be the next to face rising coverage costs as a result of a warming planet, The Wall Street Journal reported Feb. 14.
According to the report, payers are already working to predict how climate change will affect their companies in the future as extreme temperatures and weather events lead to more healthcare utilization — new risk models are being developed to understand how premiums and profits could change as a result.
A key challenge, however, is a lack of historic data to create models that can predict future finances, but payers have opportunities to get ahead of the curve. A climate risk modeling executive at PwC told the WSJ that insurers could design more flexible "parametric" models that provide coverage during specific weather situations, or to further incorporate wearables data to obtain more external information. A focus on wellness programs to reduce health risks is also another forward-looking strategy, according to the report, which can be read in full here.