Private insurance is a key component of strategies to manage physical climate change impacts, but existing scenarios used by insurers are not well suited to making business decisions. We call for a complementary normative approach, based on business objectives, that delivers actionable information to decision-makers.
This is a preview of subscription content
Subscribe to Journal
Get full journal access for 1 year
only $8.25 per issue
All prices are NET prices.
VAT will be added later in the checkout.
Tax calculation will be finalised during checkout.
Rent or Buy article
Get time limited or full article access on ReadCube.
All prices are NET prices.
Herring, S. C., Christidis, N., Hoell, A., Hoerling, M. P. & Stott, P. A. B. Am. Meteor. Soc. 102, S1–S116 (2021).
Golnaraghi, M. Climate Change and the Insurance Industry: Taking Action as Risk Managers and Investors (The Geneva Association, 2018).
Physical Risk Framework: Understanding the Impacts of Climate Change on Real Estate Lending and Investment Portfolios (Cambridge Institute for Sustainability Leadership, 2019).
Global Facility for Disaster Reduction and Recovery. Financial Protection Against Disasters (World Bank, 2014).
General Insurance Stress Test 2019 (Prudential Regulatory Authority, 2019).
Grenier, R. R., Sousounis, P., Schneyer, J. & Raizman, D. Quantifying the Impact from Climate Change on US Hurricane Risk (AIR Worldwide Corporation, 2020).
Babovic, F., Sassi, M. & Castéran, A. European flood and climate change: examining the potential impact on insured losses. Risk Management Solutions https://bit.ly/3udiDCW (2020).
Insuring the Climate Transition (United Nations Environment Programme, 2021).
Mitchell-Wallace, K., Jones, M., Hillier, J. & Foote, M. Natural Catastrophe Risk Management and Modelling: A Practitioner’s Guide (John Wiley & Sons, 2017).
Golnaraghi, M. et al. Managing Physical Climate Risk: Leveraging Innovations in Catastrophe Risk Modelling (Geneva Association, 2018).
Recommendations of the Task Force on Climate-related Financial Disclosures (Task Force on Climate-related Financial Disclosures, 2017).
A Framework for Assessing Financial Impacts of Physical Climate Change (Prudential Regulatory Authority, 2019).
Guide to Climate Scenario Analysis for Central Banks and Supervisors (Network for Greening the Financial System, 2020).
Strong, K., Carpenter, O. & Ralph, D. Scenario Best Practices: Developing Scenarios for the Insurance Industry (Cambridge Centre for Risk Studies and Lighthill Risk Network, 2020).
Realistic Disaster Scenarios (RDS). Lloyds https://www.lloyds.com/market-resources/underwriting/realistic-disaster-scenarios-rds (2021).
Jones, R. N. Nat. Hazards 23, 197–230 (2001).
King, D., Schrag, D., Dadi, Z., Ye, Q. & Ghosh, A. Climate Change: A Risk Assessment (Centre for Science and Policy, Cambridge University, 2017).
Weaver, C. P. et al. Environ. Res. Lett. 12, 8 (2017).
Sharpe, S. Geoscience Communication 2, 95–100 (2019).
Fiedler, T. et al. Nat. Clim. Change 11, 87–94 (2021).
C.J.R., J.A.B. and A.M. are employees of MS Amlin — a global speciality insurer and reinsurer that is part of the MS&AD Insurance Group. C.J.R., J.A.B. and A.M. have contributed to this commentary in their own capacity; any views expressed in this Comment are their own and not those of MS Amlin or MS&AD.
About this article
Cite this article
Rye, C.J., Boyd, J.A. & Mitchell, A. Normative approach to risk management for insurers. Nat. Clim. Chang. 11, 460–463 (2021). https://doi.org/10.1038/s41558-021-01031-8