We regularly assess the actual and potential impacts of climate-related risks and opportunities on our business, strategy and financial planning.
There is clear empirical evidence that the global climate has been changing, and a far-reaching scientific consensus that this change has been due to human activity, primarily the burning of fossil fuels and agriculture. Swiss Re recognises that climate change, if left unmitigated, will potentially have disastrous effects on society and the global economy. In view of this, we are committed to playing an active role in the transition towards a low-carbon economy and to supporting our private- and public-sector clients in this transition.
Natural catastrophes are a key risk in our Property & Casualty (P&C) businesses. The damage caused by storms, floods, droughts and other natural catastrophe perils (including earthquakes) can affect millions of lives and the economies of entire countries. In 2018, we received USD 2.3 billion of P&C Reinsurance premiums from our clients for all natural catastrophe covers (for losses larger than USD 20 million). This represents approximately 14% of total premiums in this business segment, which shows the value our clients place on getting re/insurance protection against natural catastrophe risks.
On average, insured losses due to natural catastrophes have increased steadily over the past 20 years. The key reasons have been economic development, population growth, urbanisation and a higher concentration of assets in exposed areas. At the same time, the protection gap, ie the difference between insured and total economic losses, has remained substantial in all regions (see graph in Climate metrics and targets).
In view of the high potential relevance of climate change for our P&C businesses, we have addressed the issue with a strategy combining four pillars:
- Advancing our knowledge and understanding of climate change risks, quantifying and integrating them into our risk management and underwriting frameworks where relevant;
- Developing products and services to mitigate – or adapt to – climate risk;
- Raising awareness about climate change risks through dialogue with clients, employees and the public, and advocacy of a worldwide policy framework for climate change;
- Tackling our own carbon footprint and ensuring transparent annual emissions reporting.
Furthermore, climate change remains the focus of two of our Corporate Responsibility (CR) Topics: “Managing climate and natural disaster risk” and “Advancing sustainable energy solutions”. You can find out more about these and our other CR Topics in the 2018 Corporate Responsibility Report. As our climate strategy shows, understanding the risks posed by climate change and spotting the potential to create suitable products and services have both been priorities for Swiss Re.