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Climate risk: a decade of insured losses

Climate Risk is InsTech’s monthly newsletter dedicated to climate-related insurance news.

A decade of insured losses: don’t just blame climate change

Insured losses from natural catastrophes have been rising for decades. According to Swiss Re, the average annual growth trend of losses since 1992 has been 5-7%.

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Lloyd’s of London has also stated this month that global economic losses could reach $5 trillion under a “plausible increase” in extreme weather events linked to climate change.  Everyone is in agreement that natural events are driving increasingly large losses – but is climate change solely to blame?

Whilst climate change is leading to more frequent and severe natural catastrophes and weather events, it is not the only driver of insured losses. Bill Churney, president of Verisk Extreme Event Solutions, states that whilst climate change is important, the growth in exposure values is the most significant factor responsible for increasing catastrophe losses. This has primarily been driven by more and more construction in high-hazard areas and rising replacement costs, largely as a result of inflation.

With more properties and livelihoods at risk than ever before, new types of insurance products are being created to protect against these losses. This includes coverage for business interruption losses after a flood and protection for farmers against freezing temperatures. We go into more detail on these topics below.

Tensorflight: Connected property data

Matthew Grant was joined by Jakub Dryjas, CEO of Tensorflight, to discuss what makes the company different in the aerial imagery space, advances in commercial property information by using AI and tips for aspiring CEOs.

Raincoat: Enabling parametric protection that scales

Raincoat works with brokers and insurers to develop and distribute parametric climate insurance for consumers in at-risk regions. In podcast episode 268, InsTech’s Henry Gale speaks again to Jonathan Gonzalez, Co-founder and CEO of Raincoat, to discuss how the company has expanded since the last podcast and consumer attitudes to parametric.

CelsiusPro acquires Global Parametrics

CelsiusPro specialises in parametric insurance solutions for extreme weather and natural catastrophes. In September 2023 it announced the acquisition of Global Parametrics. InsTech’s Henry Gale spoke to Mark Rueegg, Founder and CEO at CelsiusPro, about what this deal means for the company, the parametric risk transfer market and disaster risk financing.

Webinar: Understanding flood risk – the different modelling approaches

Flooding is the world’s most pervasive natural hazard – but modelling it accurately is hard. In this LiveChat, InsTech’s Ali Smedley was joined by Cory Isaacson, CEO and Co-founder at MGA reThought Insurance. The discussion covered the benefits of multiple views of risk, the different techniques for combining models and reThought Insurance’s approach to underwriting. You can listen to the webinar on demand here.

Parametric solutions for non-damage business interruption

Natural disasters and unusual weather can cause cost increases or a decrease in revenue for businesses, even if no physical damage has occurred. In November, we will be releasing a report on how parametric insurance solutions are being used to cover these non-physical losses. InsTech members active in this space include CerchiaFathomFloodbaseMitiga and Reask – you can learn more here.

In the news…

2023 wildfires become Canada’s tenth largest insurance loss event

According to catastrophe analytics company CatIQ, the 2023 wildfires have become the largest insured event ever recorded in British Columbia and the tenth costliest in the country’s history. It is estimated that the insured loss from this summer’s wildfires in the Okanagan (McDougall Creek) and Shuswap (Bush Creek East) regions have reached over $720 million. Seven of the other top ten costliest natural disasters in Canada have occurred since 2013.

Previsico gains £1.75 million funding

Led by Foresight Group, Previsico has raised £1.75 million in Seed Plus funding. The investment round will help to support the next stage of the company’s product development, including IoT sensors, and expansion outside of the UK.

Arbol launches insurance product for low temperatures

Arbol’s new solution will help protect insurance clients such as farmers, agribusinesses and vineyards against losses associated with low temperatures. The offering uses a custom temperature index, developed for each client based on third-party data.

ChAI: how might El Niño impact commodity production?

Various agricultural commodity markets are witnessing upwards price trends due to the potential impacts of the current El Niño climate pattern. In this article, ChAI explores how cocoa, coffee and sugar production is likely to be impacted by El Niño over the next year.

CoreLogic: the value of combining models in wildfire risk management

In the final instalment of its series on wildfire hazard and risk management, CoreLogic explores the value of combining deterministic and probabilistic models. The article describes how its wildfire risk scores and US wildfire model can be used to more accurately assess risk.

New York to require flood risk disclosures in home sales

A bill has been signed requiring people selling their homes to disclose whether their properties have been flooded or are at risk of future flooding. This makes New York the 30th state in the US to require flood disclosures during home sales. The law will take effect in March 2024, closing a loophole in state law that has allowed sellers to pay $500 to avoid disclosing their homes’ flood risk.

KPMG: only a quarter of global firms are ready for new ESG rules

Whilst most companies are already doing some reporting on ESG topics, it is primarily on a voluntary basis. New rules and market demands are changing, leaving only 25% of firms feeling fully equipped for upcoming ESG assurance and reporting, according to KPMG’s latest survey. Of those least prepared companies, 58% of them say it is challenging to balance ESG assurance goals with the profit expectations of shareholders.

e2Value provides property valuations for over two decades

e2Value, a provider of web-based property valuation solutions, has now been operating for 23 years. In this article, CEO and Co-founder Todd Rissel describes how the company has developed over the years and how AI will enhance insurers’ understanding and pricing of risk.