Emerging risk case study: life & health implications of climate change

Crowded street in a sunset mood (photo)

In many geographical areas climate change is leading to more frequent heat days. This is likely, eg, to increase the risk of strokes, cardiovascular diseases and accidents. At Swiss Re, we treat such climate-related implications on life and health re/insurance as an emerging risk.

Swiss Re has highlighted risks from climate change since the 1980s and has achieved a reputation as a pioneer and thought leader on this topic in the re/insurance industry. Some climate change impacts, eg sea-level rise, are relatively easy to model accurately, and risk transfer offerings can be adjusted on a yearly basis. Other effects are more complex, however, because they involve knock-on and cascading effects. Such emerging risks may build up over a long period without any visible impacts, but when loss events are finally triggered, they can be severe.

An important area where emerging risks connected to climate change are likely to occur is life and health (L&H) re/insurance. Building on Swiss Re’s own expertise and on our long-standing cooperative efforts with research institutions, we dedicated a special feature to this topic in our 2019 SONAR Report, with related content on interactive web pages. Its central piece is an infographic which depicts key factors producing impacts on L&H insurers and their respective lines of business.

Developing fast as a real and present-day problem, emerging L&H risks connected to climate change not only impact traditional L&H covers, but are also a concern in the context of workplace accident insurance. The most significant impacts are expected from the following causes: changing patterns in infectious diseases, which increase the likelihood of pandemics; more frequent heat days leading to more strokes, cardiovascular problems and accidents; and a rise in respiratory and other chronic diseases.

Major impacts are also expected for public health systems, eg due to famine and migration, and the vulnerability of the health care sector may thus increase. Hospitals and other critical health infrastructures are not only dependent on professional care providers, but also on basic sanitary conditions, power supplies etc – all of which are themselves becoming more vulnerable to climate change effects.

By providing financial risk transfer solutions to individuals, infrastructure providers and others, the insurance industry can support building resilience to emerging L&H risks on many levels. Importantly, this includes the provision of risk expertise and the fostering of risk dialogue.

For a pioneering research collaboration, see Climate Change Futures. Health, Ecological and Economic Dimensions. A Project of The Center of Health and the Global Environment, Harvard Medical School. Sponsored by: Swiss Re and the United Nations Development Programme, 2005.

In 2019, we contributed to a new position paper published by The CRO Forum’s Emerging Risk Initiative: The heat is on – Insurability and Resilience in a Changing Climate, January 2019.