The insurance of climate-related physical risks: challenges and opportunities for actuaries

Abstract

Abstract We examine the key challenges associated with insuring climate-related risks in the context of a changing climate. Adopting a balance-sheet perspective on insurance company management, we analyze the concept of insurability and how it may be reshaped by climate change. Focussing on non-life perils, we further explore the roles of regulation, risk prevention and mitigation in addressing these issues, and discuss a range of potential solutions – and limitations – that emerge. These challenges also open up interesting opportunities for both academic research and practical innovation within the insurance industry.