Climate risk: An issue for today and tomorrow

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Climate Risk is InsTech London’s monthly newsletter dedicated to climate-related insurance news - you can sign up for free here.

Climate-related disasters are a huge loss driver for the insurance industry. According to Aon’s 2021 Weather, Climate and Catastrophe report, nine of the ten costliest natural disasters of all time are climate-related. The economic cost solely resulting from such weather and climate-related events in 2021, defined as events caused by atmospheric-driven phenomena, totalled $329 billion.

The InsTech Climate Risk newsletter covers such current day climate-related events, but it also includes news and insights related to climate change. Climate change is an important issue for insurers both in terms of how they are impacted by it, and how they are impacting it.

In conversation with Katie Lennon

Katie Lennon, Head of ESG, UK & Lloyd’s at AXA XL, joined Matthew Grant on episode 175 of the InsTech podcast. She discusses practical examples of measuring climate impact and the work being done to standardise greenhouse gas emissions allocation across insurance.

Insurers have relatively limited direct GHG emissions, referred to as Scope 1 emissions. Most of their carbon impact is due to indirect GHG emissions, mostly Scope 3 emissions, produced by suppliers and customers including insurers’ underwriting, claims and investment activities. This is explored further in the podcast.

Event: Climate Change Regulation and Measurement

InsTech London’s upcoming report, Climate Change Regulation and Measurement, covers the opportunities and challenges in reporting insurers’ climate change risk and impact. Sign up here to attend our online report launch event featuring speakers from Fathom and Reask and Convex. 

A Case Study in Collecting Actionable Data in the Era of Extreme Floods

A chance to read the highlights from our live digital event where Matthew was joined by ICEYE and McKenzie Intelligence Services (MIS) to talk through how ICEYE deploys its synthetic aperture radar satellites and how this data can be accessed via MIS.

Climate Change Risks and Opportunities: S&P event highlights podcast

We’ve extracted some of the highlights from our last Live Event at CodeNode in London to create podcast episode 174. Find out how insurers are responding to the challenge of measuring climate change impacts. Hear solutions and examples from S&P Global, Beazley and Chaucer, plus contributions from Fathom and Maximum Information.

In the news...

Reask gains funding to expand sophistication of catastrophe models

The funding will support the next stage of Reask’s product development, operational expansion and business development worldwide, including the London Market. Reask’s models differ from traditional natural catastrophe models due to their explicit connection to changing global climate conditions.

Tractable launches natural disaster assessment solution 

Tractable, which develops artificial intelligence for visual assessment and disaster recovery, has launched AI Property. The solution will assess damage to buildings caused by hurricanes, floods and other natural disasters and will then relay this information to a homeowner’s insurer.

10.2m properties in Great Britain to be at greater risk of subsidence by 2050

In this article, Gamma Location Intelligence explores the potential impacts of climate change on subsidence and windstorm risk. Using data from weather risk data provider MetSwift, Gamma has found that the number of windy days is decreasing, but the intensity of events may increase.

ICEYE: $136m Series D funding round

ICEYE has raised a total of $304 million since 2015. It will use the new capital to improve its natural catastrophe solutions and to further develop its satellite constellation and technology.

JBA new UK Flood Model: One in four properties at risk

JBA’s new UK Flood Model highlights an estimated annual cost of £527m to UK residential properties from flood, a figure that rises to £1.9 billion without flood defences. Coastal flooding costs are estimated to be up to 13 times higher without coastal flood defences.

CoreLogic and AXA Climate partner on hail product

CoreLogic has been selected to expand the Hail Protection product designed by AXA Climate. Using CoreLogic’s proprietary data, the product is designed to help businesses recover from financial losses such as property damage or business interruption following a hail event.

26% increase in US flood risk by 2050 as a result of climate change

Fathom’s Chief Research Officer Dr Oliver Wing has led research into future climate change-related flood risk in the United States. The research estimates financial losses to be $32.1 billion annually, rising to $40.6 billion by 2050.

Flood Re partners with Addresscloud

Addresscloud will build and manage a new Property Data Hub for Flood Re, providing property specific information to allow insurers to more quickly and accurately identify properties that fall under the Flood Re scheme.

Aon: natural catastrophes in 2021 caused $343bn in damage

Aon has released its Weather, Climate and Catastrophe 2021 report. Of the $343 billion in economic losses, it found that 38% were insured ($130 billion), making the global protection gap 62% with $213 billion in uninsured losses.

Thailand: $52.5m parametric payout due from Typhoon Rai

Typhoon Rai killed 402 people and damaged over 1.2 million buildings in the Philippines (where it is known as Typhoon Odette) between 16 and 18 December 2021, according to RMS. The event calculation process has now been run and the typhoon breached the agreed parametric trigger for wind. Keep up to date with other parametric insurance news by signing up to InsTech’s dedicated bi-monthly newsletter. 

Howden: climate change is making primary and secondary peril distinction irrelevant

Howden has released its annual report on the risk transfer market and 1 January 2022 reinsurance renewals. It found that climate change and the increase of secondary perils were recurring themes impacting pricing property reinsurance renewals.

Prologis highlights Archipelago support for its catastrophe bond

Prologis, Inc. has highlighted the support of property data and analytics firm Archipelago in supporting its first catastrophe bond in December 2021. The company’s granular property information has enabled the assessment of peak exposure concentrations and peril specific factors.