June 27, 2014 Articles

Insurer Files Class Action Suits to Recover for Climate Change Losses

One insurer recently looked to litigation as a tool for recouping past losses it attributes to climate change

by Erin Doran

Recent extreme weather events like Hurricane Sandy, larger and more intense wildfires in the western United States, and record droughts have all been linked to climate change— that is, rising global temperatures. Sam Eaton, Climate Change and Sandy (Nov. 3, 2012), ; National Wildlife Federation, Increased Risk of Catastrophic Wildfires: Global Warming’s Wake-Up Call for the Western United States (2008),; Study Links California Drought To Global Climate Change (Apr. 24, 2014).

These events have led to record high property insurance claims in recent years. Andrew Freidman, U.S. Dominated Global Disaster Losses in 202: Swiss Re (April 1, 2013), ("The insurance industry had its third-most expensive year on record in 2012, with global economic losses from natural catastrophes and manmade disasters totaling $186 billion"). As a result of these increased losses, insurance companies are looking for ways to manage climate change risk, including ways to predict and prevent losses from extreme weather events. AIG, Climate Change: A Call for Weatherproofing the Insurance Industry.

One insurer recently looked to litigation as a tool for recouping past losses it attributes to climate change. In April 2014, Illinois Farmers Insurance Company (Illinois Farmers) filed several proposed class action lawsuits in Illinois state court, alleging that Chicago and surrounding municipalities failed to increase their storm water storage capacity, which allowed heavy rainfalls in the Chicago area on April 17 and 18, 2013, causing widespread flooding of homes. Kira Lerner, Ill. Farmers Says Chicago, Towns Didn't Prevent Flooding (April 21, 2014), http://www.law360.com/articles/538935/insurers-take-wait-and-see-approach-to-climate-change-suits?article_related_content=1. Illinois Farmers also filed similar lawsuits against other municipalities and government agencies in the counties surrounding Chicago. Bibeka Shrestha, Insurers Take Wait-and-See Approach to Climate Change Suits (May 21, 2014). The lawsuits proposed a class comprised of insurers that had paid claims regarding the April 2013 flooding event and of people who lived in the watershed districts identified in each lawsuit. Original Class Action Complaint and Demand for Jury Trial, Ill. Farmers Ins. Co. v. Metropolitan Water Reclamation District of Chicago, No. 14-cv-03251 (N.D. Ill. May 2, 2014), ECF. 1-1. Illinois Farmers asserted its claims as a subrogee of the insureds to whom it had paid claims related to the April 2013 rains.

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