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Natural catastrophes in times of economic accumulation and climate change

Source(s):  Swiss Reinsurance Company (Swiss Re)

In the coming decades, climate change will be one of many factors contributing more to growing losses. In particular, as world temperatures warm, the frequency of and losses resulting from severe weather events will rise.

This sigma includes a special chapter written by Professor Adam Sobel of the University of Columbia. The report says climate change effects are in evidence in the world today: warmer average temperatures, rising sea levels, longer and more frequent heatwaves, erratic rainfall patterns and more weather extremes. Swiss Re provides a sigma extra series as separate appendages, which highlight the impact of climate change effects in specific weather events in the following countries/regions: Australia, Canada, Europe, Japan, Mozambique and the US.

After two high-loss years in 2018 and 2017, economic losses from natural catastrophes and man-made disasters in 2019 were lower at USD 146 billion. The insurance industry covered USD 60 billion of last year's losses, down from USD 93 billion in 2018, and also below the USD 75 billion average of the previous 10 years.

To sustain insurability, the industry needs to dynamically track the effects of a warming climate, adapting models to an ever-evolving risk landscape, and continually embed new understandings into risk assessment. Key for next-generation forward-looking modelling is understanding how socio-economic factors rooted in the past, but which are currently not fully captured in models, impact rising risk and losses today. That includes complex components like loss creep, which are not always fully reflected in risk models.

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  • Natural catastrophes in times of economic accumulation and climate change
  • Publication date 2020
  • Author(s) Bevere, Lucia; Gloor, Michael; Sobel, Adam
  • Number of pages 31 p.

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