Insured catastrophe losses have increased by 360% in the past 30 years. In that same period, economic loss driven by climate change increased by 250% around the world. While most insurers consider climate change a top concern and acknowledge that the industry will continue to be heavily impacted in the future, many have yet to develop a climate resiliency strategy.
CapGemini Research Institute pulled survey results from the 2022 Global Insurance Voice of the Customer Survey and more than 270 insurance executive interviews to cover insights about insurers and their climate-change preparedness across 29 countries. They compiled those insights into a robust report and that builds a roadmap to incorporate data to build better risk models.
According to the study, only 8% of insurers are climate change frontrunners, meaning that they feel adequately prepared in data analysis capabilities, risk-prevention focus and sustainability-promoting underwriting in regards to dealing with climate change. As losses continue to rise and insured losses for secondary perils have nearly doubled just within the past 10 years, it's crucial for homeowners and insurers to figure out how to address the inevitable impact of climate change.
- Climate change concerns have sparked the longest hard market on record, with 18 quarterly composite insurance rate increases.
- Property & Casualty global premiums will continue to rise by USD 2.5 trillion over the next 20 years, with climate change driving 30-40% of this increase.
- 53% of customers surveyed are willing to pay for prevention services.
CapGemini emphasizes the importance of building and investing in a sustainable ecosystem that can support insurers in the report, suggesting companies look into having dedicated talent to support their resiliency journeys. Half of the companies who are considered climate change frontrunners have partnerships with insurtech and big tech firms for new data and AI leverage, stating that digitalization is essential to increase risk model accuracy and enable risk prevention.
Learn more about how to build a climate resiliency framework to work with the changing risk impact of climate change in CapGemini’s white paper.