climate adaptation

With the G7 meeting in Cornwall, UK beginning tomorrow and the COP26 only five months away, CEO’s of major global corporations are calling on world leaders to scale up climate risk transfer as part of the financial response to climate change.

United Nations (UN) Secretary General António Guterres has again said that the world needs more catastrophe-triggered financing and better instruments to support the delivery of climate financing, to enhance disaster resilience, fund adaptation measures and finance climate risk.

Driving home the importance of climate risk mitigation, resilience building and also the role of insurance or reinsurance in providing climate risk transfer, global reinsurer Swiss Re warns that the world’s economy risks a significant hit as the climate changes.

The deepening of the world’s understanding, measurement and valuation of climate risks is going to drive a massive demand for contingent risk capital, which parametric triggers and insurance-linked securities (ILS) will be well-suited to serve, Rowan Douglas of Willis Towers Watson explained during our ILS NYC event this week.

Climate change and the future state of our climate may mean increased damage and ultimately insurance and reinsurance market losses from hurricanes, as more frequent storms and sea-level rise ramp up storm surge impacts in particular.

It is time for the world to act on climate change as it will play an increasing role in disaster losses, Torsten Jeworrek of reinsurance company Munich Re warned today.

The physical climate risk protection gap, so the gulf between climate related losses covered by insurance, reinsurance or risk transfer and those going uncovered, is widening, but instruments such as insurance-linked securities (ILS), catastrophe bonds and other blended financing solutions can help to narrow this gap.

The Climate Measurement Standards Initiative (CMSI), an Australian led collaboration on the physical risks of climate change and their disclosure, has developed a set of open-source, voluntary guidelines to help banks, financial institutions and insurers better assess the risk and quantify the costs of climate-related damage.

Global action to combat climate change is essential to avoid the exposure becoming systemic in nature, which might cause it to become less insurable, according to Munich Re’s CEO of Reinsurance, Torsten Jeworrek.

Following the increased severity and frequency of wildfires, droughts and floods in recent times, the undeniable impact of climate change on water-related catastrophes is starting to get priced in and risk premiums are adjusting, according to Niklaus Hilti, Head of Credit Suisse’s Insurance-Linked Strategies division.