How Insurers View the Impact of Climate Change

Besides revealing attitudes about climate change, the Ceres report highlights how insurers view the impacts of climate change affecting the industry.

Some insurers believe climate change could potentially affect the availability and cost of risk transfer options, reinsurance, catastrophe bonds and catastrophe swaps, according to the report.

In its response, Progressive Insurance Group said: “Extreme global weather volatility could increase risk financing costs. Risk financing is the process by which a company secures the appropriate funds to cover unexpected financial losses arising from a risk that the company has deliberately retained. Both capacity in the reinsurance market and availability of capital from the catastrophe bond market could, theoretically, become constrained after the occurrence of extreme weather events.”

Reputation was another motivating factor for insurers embracing climate change policies and attitudes, according to the report.

One such company is The Hartford Insurance Group: “We believe that companies that themselves demonstrate a strong, comprehensive and sustained approach to environmental stewardship and offer appropriate products at the appropriate price can build a green insurance brand. Also, in the war for talent, companies that can demonstrate to their employees that they have a serious commitment to environmental stewardship will be better positioned to attract and engage talented employees.”