Home insurance is expected to become more expensive

“If your home is not covered by home insurance, you are very vulnerable if something happens. It is therefore important to preserve the strong insurance protection we have in Sweden, even when extreme weather becomes more common,” says Emilia Högquist, Head of Sustainable Finance at FI.

Climate change is expected to lead to more – and more intensive – extreme weather. This introduces a risk of more damages to residential properties and increased costs for insurance undertakings. FI has now reviewed how this could impact consumers’ insurance coverage. 

FI notes that home insurance will most likely become more expensive, but the risk of limited possibilities to insure a residential property against natural hazards is generally low in the short term. The report also shows that this risk is higher in areas with a greater risk of, for example, flooding, landslides or rock fall. Without effective climate adaptation, the risk that the insurance coverage in exposed areas will become limited also increases in the longer term.

“Insurance undertakings need to adapt their products and pricing to meet higher risks, and we expect them to clearly specify to their customers what the insurance covers. At the same time, continued progress in the climate adaptation within society is crucial. We encourage municipalities, regions, and state actors to work together with the insurance industry, which possesses a lot of knowledge,” says Emilia Högquist.

Important to be aware

FI views positively that insurance undertakings create incentives for consumers to prevent damages to their residential properties. It is also becoming increasingly important for consumers to be aware about the hazard risks present for their properties, the coverage included in their home insurance, and what measures could reduce the vulnerability of individual properties.