For a reinsurer, climate change constitutes a key risk because it will lead to an increase in the frequency and severity of natural catastrophes such as floods, storms, excessive rainfall and drought. In combination with growing asset concentrations in exposed areas and more widespread insurance protection, this will cause a steady rise in losses.
A time-lapse view of Hurricane Andrew travelling towards the Gulf of Mexico. Natural catastrophes and the impact of climate change remain key topics for us and our partners.
Since detecting the long-term threat posed by climate change more than 20 years ago, we have been an acknowledged thought leader on the topic. To tackle the issue, we pursue a comprehensive strategy with four pillars. This is described in the box below, together with the strongest business impacts of climate change.
The four pillars of our climate change strategy
- 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 advocating a worldwide policy framework for climate change;
- Tackling our own carbon footprint and ensuring transparent, annual emissions reporting.
The main business impacts of climate change
- We need to understand how climate change affects natural catastrophe risks so we can price our covers accurately; See chapter “Natural catastrophes and climate change”
- Efforts to mitigate climate change create opportunities to offer insurance protection for renewable energy projects; See chapter “Sustainable energy solutions”
- Efforts to adapt to climate change create opportunities to develop innovative products offering protection against natural catastrophes; See chapter “Strengthening risk resilience: highlights of 2014” and chapter “Corporate responsibility in context: expanding re/insurance protection”
- Regulatory responses to climate change may bring new reporting requirements we need to be aware of. See chapter “Regulatory risks”