Insurance industry on alert as 91% of executives consider climate change a major threat: Conning

A new report from Conning, an investment management and insurance research provider, titled “Climate Risk: An Imminent Threat to Business,” highlights the growing importance of assessing and managing physical and transitional risks linked to climate change within the insurance sector.

The report, based on a survey of insurance industry executives, reflects Conning’s focus on providing insight into the industry’s key challenges.

The potential effects of climate change, including increased extreme weather events and disruption to ecosystems and people’s livelihoods, are raising concerns about their financial impact on the insurance industry.

Manu Mazumdar, Director and Head of Data Analytics and Insurance Technology in Conning’s Insurance Research Group and lead author of this climate risk study, commented: “60% of executives indicated that They planned to invest in tools, vendors, data and underwriting practices to improve climate risk assessments.

“The survey also found that smaller insurers – those writing less than $5 billion in direct premiums, representing 53% of the market – are an important segment seeking additional support to manage the challenges posed by climate risk.

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Additionally, recent changes to SEC (Securities and Exchange Commission) disclosure rules have added uncertainty regarding transition climate risks.

According to the report, 91% of insurance executives expressed “significant” concern about climate change as a threat to their business, with the remaining 9% recognizing at least some level of risk.

“During the period 2017 to 2023, homeowners insurance and commercial property insurance together reported $935 billion in losses and expenses, compared to $882 billion in net premiums earned (~$52 billion in losses subscription). Although long-term insurance lines may be able to deliver an operating profit with strong investment returns given these results, real estate insurance lines are short-term and have a combined ratio of 105%. at 106% is not sustainable,” added Scott Hawkins, Executive Director. Director and Head of Insurance Research at Conning.

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