- FCA publishes final report of its Wholesale Insurance Brokers market study-no evidence of significant levels of harm that merit the introduction of intrusive remedies but some areas of concern with scope for improvement
- EIOPA issues Recommendations for the insurance sector in light of the UK withdrawing from the European Union without a withdrawal agreement
- Insurance Europe responds strongly to recently-published US Treasury/Internal Revenue Service’s proposed Base Erosion and Anti-abuse Tax (BEAT) regulations
- SCOR "delivers robust growth and solid recurring profitability" in 2018 says CEO Kessler
- KPMG report indicates UK InsurTechs saw over $1bn of investment activity through 2018, up from $792m in 2017
- Allianz increases fund size of digital investment unit to E1bn
- DeadHappy, the UK’s first fully digital life insurance brand, launched expired
- The Floow involved in UK Government’s UPLIFT project to enhance technologies in improved risk understanding for motor insurance products making mobility smarter and safer for all expired
- Unions and insurers issue joint warning about burden of significant increase in EU regulation on insurance workers expired
- FCA announces Goldwag as new Chair of the independent Financial Services Consumer Panel expired
- Antares appoints Battle as CEO expired
- Arig has tough 2018-has taken certain measures to reorganize its Lloyd’s book of business expired
16th May 2018
Waterloo University study says insurance industry dangerously unprepared for extreme weather
As historic flooding caused by climate change devastates communities in New Brunswick and British Columbia, new research from the University of Waterloo reveals the insurance industry hasn’t considered a changing climate in their practices, putting homeowners at financial risk.
The study which looked at data from 178 insurers, found that most insurance companies assumed the risk to property from extreme weather is static and based their premiums on historical data. However, as extreme weather events are increasing in severity, frequency, and unpredictability, insurers have not adjusted.
“As extreme events become more frequent, insurers that ignore climate change will not put away enough money to cover their claims. To re-coup those losses, they’ll have to raise rates or pull coverage from high risk areas,” said Jason Thistlethwaite, a climate change economist at the University of Waterloo. “When this shift happens, thousands of people will lose coverage or it will be unaffordable.”
Another finding in the report outlined how reinsurers have been better at reacting and adapting to climate change-related financial risk. This dynamic could lead to significant disruption in global insurance industry.
“Some insurers are better at understanding climate change than others. These organisations will survive, and likely be able to sell climate services to their counterparts struggling to understand the problem,” said Thistlethwaite. “Those that don’t, will fail. Insurers are supposed to watch our backs by looking into the future and protect us from unexpected events. We pay to not worry about these things.”
A full version of the study, "Insurance and Climate Change Risk Management: Rescaling to Look Beyond the Horizon", was published in the British Journal of Management.