Matt Simon covers cannabis, robots, and climate science for WIRED.“Yes, some Muslims might find insurance inappropriate, but to me it is more because of a lack of financial literacy,” says Iene Muliati, a fellow of the Society of Actuaries of Indonesia. “They don’t understand why the product is important.” In addition, Muliati says, there is an expectation that family members will look out for each other.But Indonesians, and indeed all of humanity, haven’t seen a crisis quite this daunting. The sea is swallowing up the nation's 17,000 islands, so families can’t just move down the street to escape danger. They’ll need money to relocate and find new livelihoods—money that insurance can provide.A solution here might be microinsurance, an affordable way for low-income people to protect their crops and homes against disaster, right through a mobile phone. “But again, if people don’t understand why they need the product, and if they don’t have disposable income, they won’t buy it,” says Muliati.Complicating matters further is the fact that insurers—not only in the developing world but all across the planet—have already started avoiding certain areas or jacking up their premiums. “Increasingly, what you're finding is that insurance is becoming unavailable to people,” says Blair Feltmate, head of the Intact Centre for Climate Adaptation at Canada’s University of Waterloo. “The amount they would have to pay in premiums becomes logarithmic—in other words, it's off the charts.”
The WIRED Guide to Climate ChangeBut the insurance industry doesn’t exist to not sell insurance. “That's the equivalent of McDonald's saying, We’re not going to sell hamburgers,” says Feltmate. “The business of insurance is to sell insurance.” The question now is how you peddle risk mitigation in a world of ever more unpredictable risks.In Canada, for instance, climate change is fueling extreme rain events, inundating cities like never before, in large part because natural buffers like marshes and forests have been stripped away by development. The obvious solution is adaptation—not only cutting greenhouse gas emissions quickly and dramatically but also reinforcing cities against rising seas and extreme weather events. It’s a good investment, really: A dollar spent on adaptation saves between 4 and 10 dollars in recovery efforts when disaster rolls through, according to Feltmate.But not every nation has the funds, or the political will, for such pursuits. (Even the famously progressive Californians can't agree how to fight rising seas.) At the moment, Muliati says, Indonesia’s approach is “not really preventive; it's more responsive.” That’s true “even in the areas like Jakarta where we know the land is below the sea.”Still, Indonesia is taking steps to prepare itself for the coming decades. Last year, the government announced that it would start insuring public buildings to better prepare for disasters. And by 2021, the University of Waterloo is aiming to produce 745 new graduates in actuarial science through its Risk Management Economic Sustainability and Actuarial Science Development in Indonesia program (aka READI).“It has only really been in the last five years or so that not just Indonesia but the world has more or less shaken its head and said, Yeah, this is a real problem,” says Jean Lowry, project director of READI. “The insurance sector, and actuaries in particular, are all fact-based. You can't sell them on anything unless they see the numbers.”
Take it from one of the businesses with the most to lose: The climate reckoning has come.
- Lunar mysteries that science still needs to solve
- The hard-luck Texas town that bet on bitcoin—and lost
- How to save money and skip lines at the airport
- This poker bot can beat multiple pros—at once
- On TikTok, teens meme the app ruining their summer
- 🏃🏽♀️ Want the best tools to get healthy? Check out our Gear team’s picks for the best fitness trackers , running gear (including shoes and socks ), and best headphones .
- 📩 Get even more of our inside scoops with our weekly Backchannel newsletter
Thus began the contentious career of the notion of “actuarial fairness,” an idea that would spread in time far beyond the insurance industry into policing and paroling, education, and eventually AI, igniting fierce debates along the way over the push by our increasingly market-oriented society to define fairness in statistical and individualistic terms rather than relying on the morals and community standards used historically.