Financial services companies and academic institutions are developing the products and policies needed to mitigate the impact of extreme weather events, according to panelists who convened today at the Insurance Information Institute’s (III) annual Joint Industry Forum (JIF).
The JIF panelists who gathered to discuss Climate Change Risk & Resilience: Facing the Facts agreed extreme weather events were occurring with more frequency and greater intensity, resulting in higher risk exposure and expenses for insurers and their policyholders worldwide.
Moreover, the climate and sustainability agenda has been the fastest growing workstream in their ranks in recent years, they said. Starting in Europe, climate risk issues have become a global issue with working groups in jurisdictions and capitals around the world, the panelists explained.
The panelists included Tim Adams, president and CEO, Institute of International Finance; Susan Holliday, senior advisor, International Finance Corporation; and Carolyn Kousky, executive director, Wharton Risk Management and Decision Processes Center.
Adams discussed the importance of finding explanations for problems and solutions that transcend the political spectrum. He also noted the value of science-based research, methodology, and data as critical building blocks for constructing and responding to regulatory guidelines.
“We can craft smart policies to address the most important challenge of our professional careers through a combination of industry creativity, responding to our clients’ needs and demands, and engaging with policymakers at the state and federal levels,” said Adams.
Holliday said getting people to understand how catastrophic events in one country or continent impact the rest of the world can help people understand risk and help steer engagement on climate-related issues.
“In my view, we need to look in terms of prevention and mitigation, as well as ways of compensating when bad weather events take place,” Holliday said. “To only look at compensation after the event and ignoring other angles is not sustainable, nor is it affordable for the private sector or governments.”
Kousky says academic research around climate-related impacts has greatly expanded and is being addressed by a wide range of disciplines. That is because the issue will impact every sector of the economy, Kousky added.
“We have research looking at how changing climate extremes impacts housing markets and mortgage markets,” Kousky said. “We’ve also been looking at the potential impacts of climate to the property insurance industry. For example, we’re examining the responses to the escalating wildfire risk in California.”
Kousky also noted many tools are emerging to help manage risks but said there should be more coordination across various sectors.