Longer-term climate threats being ignored by risk professionals: Airmic

New research from Airmic says that risk professionals are highly focused on addressing immediate natural peril risks at the expense of looking at longer-term climate threats.

The firm says that its Climate Risk and Parametric Insurance Cover survey shows that climate risk is still not getting the priority it needs among the majority of risk professionals, and there is a major opportunity for parametric insurance products to play a bigger role in companies’ strategies.

When climate change is seen as a priority, the survey concluded that concern is primarily around managing the short-term impacts of increasingly frequent and severe weather events such as flooding and tropical cyclones.

This short-term focus prevails over the more deleterious long-term effects of climate change, the survey revealed.

Mitigating the effects of floods and extreme heat were the top focuses among firms’ climate-risk-related efforts.

Hoe-Yeong Loke, Airmic’s head of research, said: “In this perfect storm of risks we find ourselves in, metaphorically, it is understandable why risk professionals have found that they need to focus on more immediate risks such as flooding and tropical cyclones.”

He added: “However, the future costs of inaction on long-term climate risk will compound, and the consequences of that will be irreversible.”

The majority of respondents ranked climate risk as outside their top five priorities, amid the other risks on their register. More than three-quarters (76%) of respondents said they do not consider that traditional property damage and business interruption (PDBI) policies adequately cover natural perils. Respondents said that this is largely because of the restricted or excluded coverage of those policies.

Lack of capacity, heightened pricing and lack of non-damage business interruption coverage were also cited as barriers.

In releasing the survey, Airmic did not give any details of how many people it spoke to for its survey, or when, or which specific roles they played within their organisations.

Source: Reinsurance News, https://www.reinsurancene.ws/longer-term-climate-threats-being-ignored-by-risk-professionals-airmic/