Industry research suggests environmental and climate change remains a top of mind risk for global insurance CEOs. This is not a surprise given the number of severe disasters in recent years, from floods, hurricanes, typhoons, droughts and wildfires. So, the sector must continue to be heavily involved in managing the risk.

Unpicking each issue shows the need for a layered response focusing on:

• pre-loss resilience: flood defences, construction, predictive analytical modelling
• mitigation: reducing use of fossil fuels, recycling and a drive for renewable energy
• post-loss service and mobilisation: combining technology and people expertise where speed of response is critical to reduce loss of life, disruption, consequential loss and business interruption

Increased weather losses

Climate change is likely to mean more frequent and severe weather events globally. Despite a huge insurance protection gap, particularly in many of the most vulnerable countries, the impacts to the economy and society mean people will be more reliant on insurance.
If the focus is purely on post-loss there is a risk of increasing premiums due to increased larger pay-outs per catastrophic event, perpetuating protection gaps and making insurance in certain areas unaffordable.

Investments

The global insurance sector plays a huge role in economic prosperity through the trillions it invests to support future pension funds, technology and future loss pools. To support a greener and sustainable world there is a faster transition towards more investment in renewables and resilience, and diversification of assets. The short-term cost of doing business/investing may increase to meet compliance.

Social and civil disobedience

The problem of climate change and insurance is not just in single costly catastrophes with damages to buildings, property and infrastructure. It is also the human story.

There is the increased threat of rioting and looting post-loss as people are displaced, loose basic communications, and feel abandoned.

Dealing with a loss on the ground we must be deeply experienced to understand the local insights, culture and how to navigate the claims services process, empathetically.

In summary, the global risks are connected, complex and need an innovative, holistic partnership-based approach to add value and influence change.

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