Climate change is an existential risk to human life. But, before we get to life as we know it potentially disappearing, this commentary will discuss climate change as a significant risk to insurers and reinsurers. Swiss Re first identified the risk in 1979, and today it is one of the most significant concerns for businesses.
Here are some statistics. In a 2014 study by Munich Re, extreme weather events—such as prolonged droughts, hurricanes, floods, and severe storms—led to $600 billion (US dollars) in insured losses since 1980. This is a 400 percent increase since 1980. Fast-forward to today, where there were $210 billion losses in 2020 and $280 billion losses in 2021 alone. And what happens to the insured losses within those numbers? They get reinsured.