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 from the burning of fossil fuels and agriculture. Swiss Re recognises that climate change, if not mitigated, 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 wildfires) can affect millions of lives and the economies of entire countries. In 2019, we received USD 2.94 billion of property and casualty reinsurance premiums from our clients for all natural catastrophe covers (for losses larger than USD 20 million). This represents approximately 15% of total premiums in P&C Reinsurance, which shows the importance our clients place on obtaining 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, climate change continues to be an essential element in our enhanced Group Sustainability Strategy, which includes “Mitigating climate risk and advancing the energy transition” as one of our three 2030 Sustainability Ambitions. As part of this ambition, we have developed a Climate Action Plan.
Building on our commitments and initiatives of recent years, our Climate Action Plan (which serves as our climate strategy), combines three objectives:
- Becoming the leading re/insurance company providing cover for physical climate risk
- Becoming a leading provider of re/insurance solutions for low-carbon transition opportunities
- Building partnerships to develop scalable solutions to mitigate and adapt to climate change
You can find out more about our Group Sustainability Strategy, our 2030 Sustainability Ambitions and Climate Action Plan in the 2019 Sustainability Report. As our Climate Action Plan indicates, understanding the risks posed by climate change and identifying the potential to create suitable products and services are and will continue to be priorities for Swiss Re.