Investor pressure to stimulate catastrophe re/insurance demand
Large corporations are under increasing pressure to disclose and ultimately financially protect themselves against weather, climate and natural disaster risks, the result of which will be a growing demand for insurance, reinsurance and risk transfer.
The “1-in-100″ initiative, which looks to integrate climate and natural disaster risk into the financial system through a process of stress-testing and disclosure, is gaining support. It seeks to mandate that globally active corporations report their exposure to 1-in-100 year disaster losses and also their resilience efforts against weather and disaster risks on balance-sheets.
The idea is that by encouraging disclosure it will also encourage greater resilience. Corporations would look to become more physically and financially resilient to disaster and weather losses in order to improve their balance-sheets, which of course means greater use of insurance and risk transfer, resulting in greater need for reinsurance and risk transfer tools such as insurance-linked securities (ILS) and catastrophe bonds it is assumed.