An increasing number of (re)insurers are therefore adopting comprehensive climate change strategies to recognize the potential impact on their businesses. Investing in solutions that help predict the likely effects of global warming on the location, intensity and cost of weather-related catastrophes is critical to acquiring a better understanding of climate change risk.
An important part of this process is refining and improving existing modeling tools that are already available within the sector, with a particular focus on sea-level rise, more intense storms and extreme precipitation events. Insurers and reinsurers should also support academic initiatives and utilize global climate models outside the sector in order to understand the latest scientific findings on how the evolving climate could change catastrophe trends in the future.
The (re)insurance sector is well positioned to confront the challenges of climate change. It already has a deep understanding of natural catastrophe risks, having amassed high-quality data on loss trends, building standards and their vulnerability to extreme weather. Its involvement in promoting risk mitigation activities such as reducing carbon emissions and resiliency by reinforcing protective measures against extreme weather events is crucial to developing long-term strategies that help manage climate change risk.
Carriers that confront the risks posed by global warming and develop innovative solutions and enhanced risk management strategies can gain a competitive advantage by adapting their underwriting practices and fully exploiting the opportunities facing their businesses.