New Partnerships Bring Climate Risk Data To Financial Institutions

New Partnerships Bring Climate Risk Data To Financial Institutions

With the increasing frequency and severity of extreme weather events, climate change is straining the financial services industry. Research from Swiss Re showed that 2023 was the fourth year in a row that underwriting for US homeowners insurance resulted in net losses, implying a need to better price climate risk. Similarly, property insurance buyers have been feeling the impacts as rates skyrocket and availability of policies diminishes. Furthermore, banks and investment managers are recognizing the materiality of climate risks, motivating them to incorporate climate impacts into their portfolio analytics.

Good financial decisions require climate risk data that are tailored to specific users and use cases. To meet this need, several climate risk vendors have formed partnerships that increase the accessibility of information, focusing on financial services and insurance. For example:

• Capgemini and Climate X have partnered to better support insurers and banks.
  Drawing on Capgemini’s sustainability solutions and Climate X’s climate risk expertise, this new partnership will improve efficiency in risk engineering and due diligence processes.
  
  
• Relying on Microsoft’s cloud services, Howden has launched its Resilience Laboratory.
  This new platform targets asset owners and investors. It uses bespoke scenarios – incorporating business decisions and climate change – to quantify financial and operational impacts. These models can inform investment and insurance priorities, as well as mergers and acquisitions, decarbonization strategies, and market expansions.
  
  
• Cytora and Mitiga are integrating climate risk data into software that targets insurers.
  This partnership brings Mitiga’s EarthScan climate analytics platform into Cytora’s risk processing, underwriting and claims management software. Bringing this new functionality into Cytora will allow insurers to assess risks to assets and portfolios exposed to current and future climate hazards and extreme weather.
  
  

To increase the resilience of people and businesses, financial institutions must account for risks in a changing climate. However, climate risk data are only valuable to the extent that they are applicable to specific activities. These new partnerships acknowledge that combining climate risk models with industry-specific software makes information more accessible, actionable and relevant.

To learn more, check out our recent research on climate risk solutions for the insurance industry and climate financial data and analytics.