Climate change may be dismissed as a hoax by the current US president, but those in the insurance and reinsurance industry are well aware of how altered weather patterns and a warming atmosphere could impact the world we live in.
Evidence of that has been brought into sharp focus in recent months. As we highlighted in our newsletters at the Monte Carlo Rendezvous de Septembre in the lead up to Hurricane Irma hitting Florida, scientists have speculated that global warming and higher sea temperatures may make natural catastrophes, and hurricanes in particular, more frequent or severe.
After what had been a benign decade of catastrophic hurricanes (in the US at least), the 2017 North Atlantic storm season has been a hive of activity. Hurricanes Harvey, Irma and Maria may well have strengthened to such intense levels on the back of warmer-than-usual water temperatures in the Atlantic Ocean. For the re/insurance industry, this is obviously a worrying trend.
Since we last went to press, the vast majority of major firms operating in the global re/insurance market have issued estimates for what they believe is their exposure to the hurricanes that tore through the Caribbean and US in August and September.
The European reinsurance giants of Swiss Re, Munich Re, Hannover Re and Scor have all published loss estimates while the Bermudian businesses such as Everest Re, RenaissanceRe, PartnerRe, Axis Capital and XL Catlin have all released their own figures.
The south-east US is one of the world’s largest peak catastrophe zones, and because of the high level of exposure present, reinsurers from around the globe are impacted when events hit this area.
So it is not only the traditional Europeans and Bermudians who have exposure to Hurricanes Harvey, Irma and Maria, but also companies such as the Japanese conglomerates like Sompo Holdings, Tokio Marine and Mitsui Sumitomo.
This month’s edition of Reactions looks in detail at the losses reported by the major insurance and reinsurance companies for Hurricanes Harvey, Irma and Maria, as well as the earthquakes that struck Mexico.
But the impact of climate change is not relevant to just the hurricanes and storms that have hit the south east US. As highlighted elsewhere in this month’s edition, California continues to be plagued by extensive wildfires as the state suffers at the hands of a vicious and long-running drought that has turned vast swathes of the region into kindling.
While the losses arising from the wildfires that ravaged California in October are not expected to be anywhere near as severe as those that have come from the hurricanes on the east coast, the events will act as a timely reminder of the impact the changing environment can have on the re/insurance industry.
The industry is of course well aware of how climate influences its business.
In what was a timely occurrence, insurance regulators from around the world met at the Sustainable Insurance Forum (SIF) in Kuala Lumpur at the end of October to discuss various regulatory responses to climate risk.
Insurance supervisors from Australia, Brazil, California, France, Malaysia, Morocco, the Netherlands, Singapore, South Africa, the UK, Washington DC as well as the International Association of Insurance Supervisors in the US attended the SIF Fall Meeting.
The SIF was launched in December 2016 and is convened by the United Nations Environment Programme, with participating countries and states creating a six-stage work programme of activities which include a focus on disclosure, access to insurance, sustainable insurance road maps, climate risk, disaster risk reduction and capacity building for insurance supervisors.
The hope is that the creation of the SIF will improve and strengthen insurance supervisors’ and regulators’ understanding of issues around sustainability, as well as foster discussions on possible opportunities for the industry.
Through such organisations, it is hoped that the industry will be at the forefront of mitigating the impact of the changing environment, although one feels that support from governments will also be required if any plans are to be actually realised.
Managing Editor, Reactions