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Climate change and natural disasters have diverse impacts. These affect the insurance industry. Discover specialist articles and opinions on the subject.
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Climate Change and Natural Disasters Overview

The consequences of climate change are diverse and are affecting the insurance industry. The physical changes, in other words regional changes in weather patterns in terms of frequency and extent, are one of the consequences of great relevance to reinsurance. Extreme weather events result in high material damage to buildings and infrastructure, as well as significant crop losses in agriculture.

The effects of climate change

Extreme weather events are also due to climate change. And there is no end in sight: the records for global mean annual temperature are being broken again and again. It is clear that the situation is grave not only for scientists and politicians, but that massive challenges are ahead for industry as well. Measures for adapting to unavoidable environmental impacts and efforts to reduce greenhouse gas emissions will both be required. The consequences of climate change can also be of a regulatory nature. On the one hand, these are connected with the regulation of carbon emissions and accompanying laws, and on the other, with liability issues and safety aspects.

Natcat loss issues

Earthquakes, storms, flooding or drought – the number of recorded loss events due to natural catastrophe is very high. Developing and emerging countries are particularly vulnerable, for example those exposed to floods and heatwaves. The most devastating earthquakes in recent years hit Haiti and Chile for example, where very severe tremors were felt in 2010. The damage caused by a particular earthquake greatly depends on the properties of the affected buildings, as well as on local subsoil conditions and the parameters of the earthquake itself, i.e. magnitude, distance and duration. The key element in this respect is resilience. Munich Re is making a significant contribution in this area not only through research, but also with innovative insurance solutions or preventative and empowerment measures together with NGOs, government officials and transnational organisations.

Focus: renewable energy

Whether in terms of classic forms of renewable energy – hydro and wind power – or new approaches like solar thermal power, photovoltaics, emissions trading, or carbon capture and storage from coal-fired power plants, we at Munich Re have the new developments firmly in our sights. We offer risk transfer solutions and are keeping in close touch with the market.

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