This week, a Swiss air quality technology company released its seventh annual World Air Quality Report. IQ Air’s massive air monitoring system gathered data from more than 40,000 monitoring stations in 138 countries. The bad news: the air people breathe in more than 90% of these countries now contains fine particulates above safe levels in World Health Organisation (WHO) guidelines.
So, what are the insurance implications? Particularly for insurers in health, life and workers’ compensation?
The impact of poor air quality on global health and economic productivity is well documented.
“The World Bank estimated that the overall cost of air pollution on health and well-being was approximately $8.1 trillion US dollars, or 6.1% of GDP, in 2019,” states a report by Global Health Research and Policy.
However, the insurance implications are probably less well known.
“While IQAir does not track specific health insurance costs as they relate to air pollution, air pollution has been shown to increase healthcare costs,” said Glory Dolphin Hammes (pictured above), CEO of IQAir’s North American division.
California-based Hammes said poor air quality leads to preventable health outcomes that increase healthcare costs for individuals. However, she said “underrepresented groups” are often those most exposed to these air quality pollution risks.
This suggests that many of the main health costs of poor air quality are not yet showing up as insurance losses. However, global insurers in the workers’ compensation space may have more to worry about.
“In the US in particular, air pollution costs the US economy over US$790 billion annually, or 5% of GDP,” said Hammes.
Better risk management of air quality could bring considerable economic and health benefits for businesses.
“The US Environmental Protection Agency estimates every dollar invested in air quality improvements yields US$30-$90 in economic and health benefits,” said Hammes. “Air pollution’s economic consequences carry huge implications for people and their communities, including reduced work hours and shifts, increased healthcare costs from disability, asthma and chronic respiratory disease and lost household income from caregiving for ill family members.”
The way poor air quality can translate into some insurance costs, apart from through health claims, is through workers’ compensation payouts.
Gary McMullen is workplace risk director for global brokerage Aon in Australia. In response to questions from Insurance Business, McMullen said air pollution can lead to a workers’ compensation claim but so far these claims numbers in Australia are “very low.”
“Depending on the circumstances, air pollution can potentially result in a workers’ compensation claim if a worker develops a health issue directly related to their exposure to significant levels of air pollution at their workplace,” he said.
The workplace risk specialist said there are three main air pollution risks scenarios:
However, in recent years, any claims numbers that could be connected to air quality in Australia, have actually been going down.
Data from Safework Australia, shared with IB by McMullen, showed that over a 10-year period from 2013 to 2023, Respiratory System Diseases claims represented 0.4% of total serious claims, or 2,778.
The data shows that 2018/19 produced a record high of nearly 500 claims but since then the count has dropped each year and was 233 in 2022/23.
“The link between a reduction in respiratory diseases claim numbers since 2018/19 and the low [very good] PM2.5 air quality data score in the World Air Quality Report is possible, however it would need a far more thorough investigation to test this hypothesis,” said McMullen.
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