The latest blog post from Frank Azar:
Farmers Insurance filed nine class action lawsuits against almost 200 communities in the Chicago area for failing to adequately prepare for flooding and damage from severe rains, Insurance Journal reports. The lawsuits could be the first of many to determine who can be held liable for the costs incurred due to the effects of climate change.
Farmers is arguing that local governments should have been aware that there would be consequences stemming from the rising of global temperatures. By their argument, municipalities should have known that climate change had the potential to increase rainfall, and that sewers and stormwater drains ought to have been fortified in preparation. These cases have potential to redefine what can reasonably defined as an “act of god.” If successful, these lawsuits could have serious consequences for how communities will have to budget for potential future emergencies.
The City of Chicago claims that it has in place a comprehensive Climate Action Plan and that it is already investing heavily on infrastructure to guard against disasters from changing weather patterns. Ironically, this foresight on the part of the city may work against them in these suits, as Farmers cites the Climate Action Plan as evidence that the government was aware of the potential risks and failed to respond properly.
Flooding occurred in Illinois in April of 2013 resulting in over 64,000 Illinois households being awarded more than $218 million in aid and loans from the federal government. Farmers has not specified how much they paid in claims due to last year’s flooding.
“It’s a long shot for the insurance companies,” said Robert Verchick, who previously served on the Obama administration’s Climate Change Adaptation Task Force, “but it’s not completely implausible, and if you have enough cases like this going forward it might build some helpful precedent.”
To read more, head over to Insurance Journal.
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