Climate-related extreme weather events continue to be a “hot topic.” Scorching heat, unusually heavy rainfalls, raging floods, and wildfires have all left their mark on North America this summer, while the world reaches record land temperatures.
Things aren’t just heating up outside, though. They’re heating up in the courtroom as well. The total number of climate-related cases around the world has doubled in the past eight years. No surprise, given our litigious society, the U.S. leads the way, accounting for 70% of documented cases since 1986.
The payouts from climate-related cases can be significant, as Keurig recently learned. This past February, the single-serve coffee company was ordered to pay a $10 million settlement as a part of a lawsuit brought against them accusing them of dishonestly marketing their disposable K-Cups as recyclable.
More Lawsuits on the Horizon?
Thanks in part to a recent move by the Supreme Court this year, we could be seeing a lot more lawsuits in the future. In April, the Supreme Court rejected several oil company appeals, as part of efforts to hold businesses accountable for their effects on climate change.
This decision removed barriers for almost two dozen stalled climate lawsuits, allowing them to move forward at the state level with a jury. It also may pave the way for countless more lawsuits against the oil industry.
Impacts of Climate-Related Lawsuits on Insurance
What does this have to do with insurance? A lot, in fact.
According to Deloitte, a swell in costly litigations and payouts related to the current climate crisis could have a significant impact on insurers who underwrite liability insurance lines of business, like Directors’ and Officers’ (D&O), Errors and Omissions (E&O), and Professional Indemnity (PI) insurance. Insureds with climate risk litigation exposures could find themselves in a position of sustaining costly losses, if a number of their policyholders find themselves on the losing side of a court case and look to their insurer for financial recourse.
As carriers take action to protect themselves against these risks and associated losses, we could see more policy exclusions, rate or pricing changes, or tightening of terms related to climate litigation.
Interested in learning more? Here are a few resources:
- Global Trends in Climate Change Litigation: 2023 Snapshot
- Assessing Climate Litigation Risk for Insurers
- U.S. Climate Change Litigation Database
When it comes to environmental insurance, the rules of the game are always changing. It’s important to work with a reputable wholesaler, like Jencap, who has expertise in environmental insurance and keeps a close eye on how current environmental trends are impacting the industry and insureds. Contact Jencap today to speak to one of our specialists.
