globalen
The unique climate change risks facing insurers

The unique climate change risks facing insurers

02-07-2020 | Insight
Climate change has become undeniable, and no industry has greater exposure to its risks than the insurance sector. It poses a unique threat to both sides of their balance sheets – to insurers’ assets as well as their liabilities.
  • Remmert Koekkoek
    Remmert
    Koekkoek
    Head of Insurance and Pension Solutions
  • Sandor Hendriks
    Sandor
    Hendriks
    Head of Financial Risk Management
  • Edward Collinge
    Edward
    Collinge
    Global Head of Insurance Strategy

It’s not only the rising costs from claims for damage to property caused by increasingly severe weather that pose the problem. Insurers invest the premiums they receive in financial markets to gain enough returns to fund their liabilities.

These investee companies are themselves exposed to climate risk, particularly through the need to decarbonize in the transition to a low-carbon economy. This creates a double whammy for insurers and it urgently needs addressing.

A new white paper from the insurance team at Robeco entitled ‘Climate change: a problem that insurance companies can’t afford to ignore’ examines the issue from multiple angles.

Stay informed on Sustainable Investing with monthly mail updates
Stay informed on Sustainable Investing with monthly mail updates
Subscribe

Double-sided threat

First, there are the costs: the ever-increasing bill for claims from storm damage or flooding raises the question about what will be insurable in the future. Businesses near the coast or on flood plains may find themselves being rejected for cover.

The far bigger problem, though, comes from where insurance money is invested. Insurers tend to invest across a wide spectrum of stocks and bonds to spread their risks and raise as much return as possible within their risk budgets.

This includes companies that are more exposed to climate change risks than others, plus those that face risks from the need to transition to a lower-carbon business model, such as fossil fuel providers and utilities.

So, what to do about it? Robeco offers its expertise in calculating the carbon risk in investment portfolios as a means of assisting insurers with this kind of risk assessment. To find out how, download our white paper today.

Download the white paper

Disclaimer

This report is not available for users from countries where the offering of foreign financial services is not permitted, such as US Persons.

Your details are not shared with third parties. This information is exclusively intended for professional investors. All requests are checked.

Logo

Disclaimer

The information contained in the website is solely intended for professional investors. Some funds shown on this website fall outside the scope of the Dutch Act on the Financial Supervision (Wet op het financieel toezicht) and therefore do not (need to) have a license from the Authority for the Financial Markets (AFM).

The funds shown on this website may not be available in your country. Please select your country website (top right corner) to view the products that are available in your country.

Neither information nor any opinion expressed on the website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco product should only be made after reading the related legal documents such as management regulations, prospectuses, annual and semi-annual reports, which can be all be obtained free of charge at this website and at the Robeco offices in each country where Robeco has a presence.

By clicking Proceed I confirm that I am a professional investor and that I have read, understood and accept the terms of use for this website.

Decline