Risk and coverage: the role of innovative insurance mechansims for catalysing climate action

Extreme weather, fluctuating demographics and increasing geopolitical tensions have revealed a significant gap in climate-related losses. In 2023, $14.1bn in damages were uninsured, owing in part, to the increasing regularity of extreme climate and weather events. With increasing temperatures compounded by geopolitical instability, risk assessment remains a critical debate within the sustainable finance and insurance communities.

Insurers, through risk pricing, are at an intersection vital for pushing the sustainability agenda forward. Insurance risk has traditionally been measured and priced through historical data to predict future risks. However, as climate change is increasing the frequency and damage of climate shocks, risks are evolving faster than historical data can demonstrate.

Innovative insurance practices, using real-time data and climate analytics to build in climate-related risk not only may play a key role in understanding the real-time fiscal impact of climate- change related events, but can also prompt real-economy players to take sustainability seriously. This roundtable brings together insurers, ratings agencies, private and public financial institutions to discuss the role that insurance could play in catalysing climate action.