Market Overview: Climate Risk Solutions For The Insurance Industry
25 Jun, 2024
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Executive Summary
The insurance industry is at the forefront of climate risk management; insurers offer risk transfer solutions that support climate risk management in other industries and are exposed to climate change-related risks in their own assets and liabilities. As climate change progresses, and insurers work to manage these risks, they rely on a variety of digital solutions. Catastrophe (CAT) models predict damage from low frequency, high impact events and inform underwriting decisions. Climate projection models take a longer-term view and feed into business strategy, investment decisions and risk disclosures. Thirdly, real-time hazard monitoring provides critical information immediately before, during and after extreme events. This report provides an overview of these technologies and recent developments in the market for climate risk solutions for the insurance industry.
Insurers face unique climate risks and opportunities across business functions
Social, economic and political factors exacerbate insurers’ climate risk
Traditional and alternative risk transfer products insure climate risk
Insurtech firms emerge to increase availability of climate risk coverage
Developments in climate risk digital solutions support the insurance industry
CAT models inform ratemaking, underwriting and reinsurance purchasing decisions
Forward-looking climate projection models contribute to longer-term risk management
Real-time hazard monitoring improves responses before, during and after extreme events
Social, economic and political factors exacerbate insurers’ climate risk
Traditional and alternative risk transfer products insure climate risk
Insurtech firms emerge to increase availability of climate risk coverage
Developments in climate risk digital solutions support the insurance industry
CAT models inform ratemaking, underwriting and reinsurance purchasing decisions
Forward-looking climate projection models contribute to longer-term risk management
Real-time hazard monitoring improves responses before, during and after extreme events
Figure 1. Segmentation of climate risk solutions for the insurance industry
Figure 2. Vendors offering future-looking climate projection models for the insurance industry
Figure 2. Vendors offering future-looking climate projection models for the insurance industry
Allianz Global Investors, AON, Arbol, Artemis, Baron Weather, Chicago Mercantile Exchange, CLIMADA Technologies, CLIMsystems, Conning, CoreLogic, EigenRisk, Fathom, Futureproof, HDI Global, Howden, ICEYE, Insurance Development Forum, JBA Risk Management, KatRisk, Kettle, Liberty Mutual Insurance, Marsh, Mitiga Solutions, Moody's, Munich Re, NASDAQ, National Association of Insurance Commissioners, Nature Communications, OnSolve, Risk Frontiers, riskthinking.AI, Springer Nature, Swiss Re, The Nature Conservancy, Travelers, United States Census Bureau, University of California, Berkeley, Verisk Analytics, WTW, Zurich
About the Authors
Emma Cutler
Principal Analyst
Emma is a Principal Analyst at Verdantix, with a current research agenda focusing on solutions for climate risk management. She has a background in simulation and statistical ...
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Ryan Skinner
Research Director
Ryan is a Research Director at Verdantix, where he leads a team of analysts delivering research, data and advisory services that help clients navigate the fast-evolving landsc...
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