Inside Out | Climate change is pushing us towards an uninsurable world
- While many Hong Kong families decide to skip buying home insurance, people around the world may soon not have a choice
- Climate change is causing insurance premiums to rise and, in the more vulnerable places, private insurers have stopped underwriting policies
Over the Christmas break, the unthinkable happened in my little Sai Kung village: a fire broke out in a neighbour’s kitchen and, by the time fire engines arrived in force, the home was gutted. Two months later, reconstruction continues, and it may be another month before my neighbours can move back in.
Like most Hong Kong’s homeowners, they were uninsured. In 2019, the deputy chairman of the Hong Kong Federation of Insurers’ Fire Insurance Association said 80 per cent of households didn’t have home insurance. And, of those that do, many are unaware that fire insurance policies only cover structural damage, and not alternative accommodation or the home’s contents.
Due to the cost of insurance premiums and wariness about exclusions, many Hongkongers choose to opt out of home insurance, unless their bank demands it as a mortgage condition. Mercifully for my neighbours, their savings will put them back on their feet. But, for many, the fire could have been catastrophic.
In global terms, Hong Kong homeowners are lucky. Unlike those in “Hurricane Alley” in the US or in the typhoon-prone Philippines, for example, the statistical risk of natural disasters triggering catastrophic losses is small.
