Climate change risk is, by its very nature, massively disruptive, and nations are responsible for an increasing share of the costs as communities and businesses rely more and more on state natural disaster relief. Put simply, insurance penetration is falling behind rising loss trends, and the situation is only going to deteriorate going forward, especially as climate change causes weather events to become more extreme. Ultimately, a public-private pandemic risk solution — with participation by insurers, reinsurers, businesses and the federal government — is our best option for enabling a smooth and quick economic recovery and protection from future events.
At the beginning of 2020, climate change was at the top of the international agenda. A series of catastrophic wildfires and storms had transformed the issue, turning it into a mainstream public concern. Nations and businesses were gearing up for COP26, marking five years since the Paris Agreement and providing the first opportunity for governments to increase their emissions reduction targets. And climate-related risks dominated the World Economic Forum’s 2020 Global Risks Report, in terms of both likelihood and severity.
Within a matter of weeks, COVID-19 had triggered simultaneous public health and economic crises, yet climate change has remained a priority. Surveys reveal that concern about climate change has persisted, and public support for government action on climate change has been galvanized. Financial regulators have pushed ahead with steps to integrate climate risks into supervisory frameworks; investors have continued to pressure companies to manage and disclose climate risk; and businesses have continued to announce ever more ambitious commitments to cut emissions.
The 2020 Marsh & McLennan Climate Resilience Handbook presents a selection of perspectives from Marsh & McLennan businesses, offering insights from their work helping clients confront climate change and navigate a course through risk to opportunity.