Insurance companies are responding to climate change in very different ways. Warren Buffett, the CEO of Berkshire Hathaway, commented last year that global warming should not be on the “list of worries” of his shareholders. Insurers have so far been able to adjust their premiums to the growing risks from catastrophic weather events, and according to Buffett, the increased risk “has made insurance companies far more valuable”.
It would, however, be shortsighted for insurers to see global warming foremost as a business opportunity. Standard & Poor’s has warned that climate change may “lead to a sudden increase in the risk and volatility of weather losses if certain tipping points are reached, for example, the melting of the Greenland ice sheet”. Aviva put this threat most bluntly: “Left unchecked”, climate change will “render significant portions of the economy uninsurable, shrinking our addressable market”.
Read the full article in The Actuary.
