Climate Change and its Impact on Insurance Market – Thematic Research

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Climate Change Impact On Insurance Market Report Overview

Climate change action is now an essential part of an insurer’s overall strategy. Total catastrophe losses around the world were estimated at $83 billion in 2020 according to Swiss Re, while total economic losses from these disasters were estimated at $210 billion as per Munich Re. The insurance industry covered 45% of global economic losses from natural catastrophes in 2020 – higher than the average level of 37% according to Swiss Re (via Insurance Times). The loss figures for 2020 were significantly higher than for 2019, and several categories (including hurricanes and wildfires) saw record years in terms of costs.

Big data is found to be present in every line of insurance, but it is especially valuable within the climate change theme, as it can help protect the insurers clients against severe weather events. Leading insurers and reinsurers have live platforms constantly tracking and updating weather risks across the world. These require vast amounts of data points, as well as artificial intelligence (AI) and machine learning for accurate and immediate insights.

Countries around the world were also found phasing out the sale of new petrol and diesel cars for environmental reasons. In total, 17 governments have committed to no longer selling new petrol or diesel vehicles, with deadlines varying from 2030 to 2050. This will have a huge impact on the global insurance industry, with electric vehicles having different risk profiles and requiring different expertise. It also opens up the threat of vehicle manufacturers offering their own insurance policies to customers.

What are the market trends impacting the climate change in insurance theme?

The global pandemic had a significant knock-on effect in terms of macroeconomic trends around the world. It had a major impact on insurers and reinsurers too. This may also cause profits to rise in the short term but would simply delay the inevitable problem. However, it could also encourage insurers and reinsurers to reassess and prioritize the climate and renewable energy.

Being environmentally friendly is like a key trend for industries and governments around the world. The emphasis placed on green and renewable energy by industries, governments, and organizations will help reduce CO2 emissions and create new energy sources to replace coal and oil.

The UN launched the industry’s first guide to manage ESG risk at a UN-Allianz event in 2019. Leading insurers gathered to discuss the issues such as climate change, environmental degradation, social inequality, aging populations, and major health risk. The guide focuses on non-life insurance and includes heat maps indicating the level of potential ESG risk across lines of business and economic sectors.

The top 10 countries in the world for insurance gross written premiums for fire and natural hazards includes severe weather incidents- are the US, Japan, India, Mexico, Turkey, Chile, Taiwan, the UAE, Colombia, and Saudi Arabia, as per our Global Insurance Database. The US is the largest in this category by a considerable margin and has over double the GWP of Japan in second place.

Top countries by natural hazard and fire insurance (GWP), 2020 Top countries by natural hazard and fire insurance (GWP), 2020

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Who are the leading players in the climate change theme in insurance sector?

Allianz, Aviva, AXA, Covea, Gen Re, Legal & General, Munich Re, Ping An Insurance, RSA, SCOR, and Swiss Re are few of the companies making their presence within the climate change theme in insurance sector.

Market report scope

Companies Covered Allianz, Aviva, AXA, Neos, Allianz, FloodFlash, Ping An, Zurich, Zesty, Munich Re, Swiss Re, AIG, Tokio Marine, Covea, Gen Re, Legal & General, RSA, SCOR, and Zurich
  • Six of the top 10 most costly weather events globally in 2020 happened in the US, which emphasizes the scale of the market, as well as the risk insurers face writing personal and commercial property cover in many states across the country.

Reasons to Buy

  • Benchmark yourself against the rest of the market.
  • Understand how competitors are dealing with the climate crisis, and how it is impacting insurance premiums and claims around the world.
  • Ensure you remain competitive by identifying key threats.

Ping An
Munich Re
Swiss Re
Tokio Marine
Gen Re
Legal & General

Table of Contents

Executive summary


GlobalData’s ESG Framework

Thematic briefing


Industry analysis

Value chain


Sector scorecard

Further reading

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