July 14, 2016 by Staff
Financial institutions such as insurers, banks and pension funds are especially vulnerable to climate change risk, a new study from the Global Risk Institute found.
In the past decade, insurers saw losses from weather-related disasters from $10 billion to $50 billion each year, adjusted for inflation.
Over time, the study also points out, climate change may make current catastrophe models unreliable, and diminish the effectiveness of portfolio diversification and risk transfers.
Nevertheless, the industry may develop clean-tech products, such as renewable energy project insurance, and products related to public policy risk, including protection against unexpected withdrawal of environmental subsidies.
“There is no question that climate change and the reaction to it will have a material impact on financial institutions,” Richard Nesbitt, chief executive for the Global Risk Institute, said in a release. “In fact, many have already begun to feel it.”
This story was originally published by Canadian Insurance Top Broker.