As climate-related risks become increasingly difficult to ignore, the insurance industry is grappling with whether it should retreat from high-risk areas or find new ways to adapt to the evolving landscape. With extreme weather events becoming more frequent and costly, insurers face the challenge of maintaining profitability while also providing coverage for vulnerable regions.
The question now is: should insurers abandon high-risk areas entirely, or is there a way to rethink the approach to coverage and risk management?
Rising climate risks are undoubtedly one of the most significant factors influencing insurance practices today. As natural disasters become more severe and unpredictable, the cost of claims is escalating. In fact, Swiss Re, one of the world’s largest reinsurance companies, recently estimated that global insurance losses from natural catastrophes have more than doubled over the past 30 years, rising from $27 billion in the early 1990s to $74 billion in 2022.
Read on to learn more about Rethinking vs. Abandoning high-risk areas.