Climate change strikes again
Climate change presents itself in various different ways such as cyclones, extreme rainfall, and the arctic melt. Amid summer, parts of the world are experiencing warmer, drier weather than usual resulting in what is called El Nino.
El Nino is a natural, temporary warming of part of the Pacific resulting in the shifting of global weather patterns. However, climate change is causing the strengthening of El Ninos, with scientists stating there is one in four chance it will expand to supersized levels.
Asia, where 90% of the world’s rice is grown, is currently enduring an El Nino resulting in far less rainfall for crops. As such the average price of rice has risen to about 16% higher than last year’s average. This is set to worsen global stocks after Pakistan, a major rice importer, endured significant floods last year.
Decreases in rice production has resulted primarily in food shortages, with India sending over 1 million tons to Indonesia, Senegal and Gambia. Additionally, sanctions on Russian exports have also disrupted shipments of the three major chemical fertilisers potash, phosphorus and nitrogen.
Considerations for insurers
The increase in extreme weather events causes disruption to agricultural production. This could result in a rise in disputes concerning unfulfilled contracts across supply chains. Additionally, this could increase business interruption claims from agricultural businesses themselves.
As such, insurers should review their policy wordings to ensure adequate protection is afforded to themselves and their insureds. Additionally, insurers may also wish to consider what risk management strategies are in place, such as alternative fertilisers and water reserves, as part of their underwriting process.
The disruptions in rice output could also lead to changes in trade policies such as the imposing of export restrictions or changing tariff rates, as in the case of China. Insurers should continue to monitor the situation and adapt their policy wordings accordingly.
Contents
- The Word, August 2023
- Oppenheimer: how do nuclear weapons affect insurers?
- Is Europe’s first EVTOL aircraft on the horizon? - emerging risks for insurers
- The rise in risky cosmetic surgery injections - the increased risk to insurers
- Can your fine art risks weather the storm?
- US Court declares a constitutional duty to protect against climate change
- How can generative AI assist the insurance industry?
Key contact
Tim Johnson
Partner
tim.johnson@brownejacobson.com
+44 (0)115 976 6557
You may be interested in...
Legal Update
Walking the fine line: The statutory duty of candour and insurance
Legal Update
FCA launches consultation on broker remuneration for multi-occupancy buildings insurance
Legal Update
AI is creating fraudulent claims
Legal Update
Shoplifting epidemic by organised criminal gangs: The impact for insurers
Legal Update
Death and disgrace policies: What can insurers learn about the allegations against Gregg Wallace?
Legal Update
Insurance complaints surge continues
Legal Update
The ‘grate’ cheese robbery: Implications for insurance professionals
Legal Update
Environmental crime and the impact for insurers
Legal Update
What might a Trump victory mean for the UK insurance industry?
Legal Update
Post Office scandal: Lessons for underwriters
Legal Update
Weather protection parametric insurance: A sign of things to come?
Legal Update
Updates to the UK’s Arbitration Bill
Legal Update
Ozempic: The rising costs and coverage issues of weight loss medication
Legal Update
ICAEW: Changes to PII requirements
Legal Update
Contractor insolvency: Peabody Trust v NHBC
Legal Update
By a narrow 2 to 1 majority, the Court of Appeal finds in favour of insurers in the construction of an exclusion clause in a W&I policy
Legal Update
LMA binders’ consultation
Legal Update
Smooth sailing ahead: The LMA's new Open Form Default Clause
Legal Update
PFAS: The issue that won’t go away
Legal Update
Oklahoma earthquake: Racial discrimination in adjudication
Legal Update
Vicarious liability for kinship foster carer abuse: Implications for local authority insurers
Legal Update
Latest short-term insurance trends
Legal Update - The Word
The Word, August 2024
Legal Update
Words matter: Another case on the importance of accurate drafting
Legal Update
London Fire Brigade to stop attending for automatic fire alarms: Implications for insurers
Legal Update
Navigating Oil Price Cap legislation: LMA issues revised Cargo and Hull wordings
Legal Update
It’s not cricket: Insurers change their mind about jurisdiction
Legal Update
Multi-occupancy building insurance: Latest tribunal decision
Legal Update - The Word
The Word, June 2024
Legal Update - Consumer Duty
Updated UK Consumer Wordings Guidance: Browne Jacobson collaborates with the LMA
Legal Update - Consumer Duty
From products to protection: The rise of embedded insurance
Legal Update
The European Accessibility Act: Inclusive products and services
Legal Update
Final FCA anti-greenwashing rule guidance published
Legal Update - The Word
The Word, May 2024
Legal Update
The Baltimore bridge collapse: One of the biggest losses in maritime insurance history?
Legal Update
The space data revolution
Legal Update
New guidance on supporting autistic customers for the insurance industry
Legal Update
Chubb ordered to indemnify SXSW for Covid cancellation
Legal Update - The Word
The Word, March 2024
