Climate Change and Reinsurance: Insurance Journal

Insurance companies purchase their own insurance – known as reinsurance – for select risks. Climate change presents “high exposure risk” for the industry – including property damage, failure to disclose risks or prevent disruptions, explains Don Jergler for Insurance Journal, reviewing a while paper on climate change and reinsurance implications. The paper points to increasing litigation, advancements in scientific and economic modeling, greater collaboration among communities and industries, a shift in investment focus from fossil fuels to renewable – and the authors anticipate credit rating downgrades for coastal municipalities. “The world’s leading insurance companies have made some progress in setting climate strategy, targets and risk management in place, although those in the U.S. are lagging those in Europe and Japan,” Jergler writes. In 2017, the world had $344 billion in global losses, with 97 percent due to weather-related events. The Intergovernmental Panel on Climate Change projects that, if average temperatures continue to rise, global economic damages could increase by more than hundredfold by 2100. – YaleGlobal