Insurance industry: Climate change hurts insurers: report

Climate change is hurting the insurance industry and only 8% of insurers are adequately prepared for its impact, said consultant Capgemini and financial industry firm Efma in a report on Tuesday.

Insured losses from natural disasters have increased by 250% in the last 30 years, with hazards such as fires and storms, especially those affected by climate change, increasing the amount of insured losses, the report said.

In the past, insurers have been at risk of major catastrophes from hurricanes in U.S. states such as Florida and Texas, Seth Rachlin, global insurance industry leader at Capgemini, told Reuters.

“We’ve seen floods in Europe and wildfires in Australia, wildfires in California. It’s becoming a wider geographical problem, affecting a wider percentage of the world.”

Germany and other parts of Europe were hit by floods in July 2021, when heavy rains flooded the east coast of Australia earlier this year.

European insurers are leading the way in embedding environmental, social and administrative issues in insurance underwriting and investment and focusing on risk mitigation, Rachelin said.

More than 30% of insurers limit investment in volatile companies worldwide and more than 20% limit insurance cover in unstable companies, the report said.

Seventy-four percent of insurers interviewed feel that climate change has made it difficult to insure in some cases.

Areas such as California have seen insurers withdraw because of the number and severity of wildfires.

71 percent of insurance customers say the offer of discounts will reduce their exposure to the risk of natural disasters on their property or other assets.

The report was voted on by more than 4,900 insurance customers in 16 countries in January and February 2022. The report is based on interviews with more than 270 senior insurance executives in 27 markets.