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In order for the insurance and reinsurance industry to address the societal challenges of climate change, more capital is going to be required and the sector capacity base needs to change forever, Aon CEO Greg Case said today.

In a new report, rating agency Fitch states that climate change is stimulating the development of the catastrophe bond market, as demand for protection rises and the capital markets offers an efficient source of reinsurance against climate-linked catastrophe events.

In comments made this afternoon during the second-quarter earnings call of Bermuda based reinsurance and third-party capital management specialist RenaissanceRe, the company’s CEO Kevin O’Donnell said the catastrophe modelling vendors are failing to robustly capture the effects of climate change.

Having now published the results of its Climate Biennial Exploratory Scenario (CBES), looking at the financial risks posed by climate change for the largest banks and insurers operating in the UK, the Bank of England believes that over-time climate risks could become a persistent drag on earnings.

Catastrophe risk modelling software specialist RMS has announced a number of its core models transitioning over to High Definition (HD) versions, while also adding more functionality to help users understand the influence of climate change on perils of note to the insurance, reinsurance and ILS market.

Investors are becoming increasingly engaged in understanding how climate change could affect portfolios of insurance-linked securities (ILS) and the work that is being done at investment managers to understand that, with many taking the time to “come back to the table”, according to Aeolus Capital Management’s Frank Fischer.

Re2 Capital has been launched by three well-known former employees of ILS manager Nephila Capital, with a mission to structure innovative climate risk transfer and financing solutions that can connect private investment capital and risk capacity to climate-linked opportunities.

As the US Securities & Exchange Commission (SEC) publishes a new set of proposed rules on climate risk disclosure, it’s becoming increasingly clear regulating for climate risk reporting is going to drive risk management and risk transfer spend, with ramifications and opportunity for insurance, reinsurance and insurance-linked securities (ILS).

The influence of climate change on returns in the insurance-linked securities (ILS) market is uneven and ILS investment managers have access to the tools necessary to adapt to advancing climate risks, making it important that investors take a balanced-view, according to alternative asset advisors SIGLO Capital Advisors AG.

In the latest edition of the Allianz Risk Barometer, there is a clear sign of the increasing concern among business leaders over rising impacts from natural catastrophe events and climate change, with both of these threats climbing the rankings for 2022.