Tailored insurance solutions for climate risk are key for agriculture
In a recent report, global reinsurer SCOR has assessed the impact that climate change can have on key natural perils that affect insurers and reinsurers, saying it’s important that solutions are developed to address the evolving risk landscape.
The report was released in the second part of the reinsurers technical paper which addresses these issues.
The paper explained how climate change has a negative impact on the yields of major crops and on associated insurance losses.
Based on estimations from methods SCOR conducted throughout the assessment, climate change will continue to have a considerable impact on agriculture losses if no adaption takes place.
SCOR said: “It is imperative that we continue to partner with our clients to understand these trends and develop tailored insurance solutions that help them remain resilient in this evolving risk landscape.”
The assessment was set out to quantify potential re/insurance loss impacts on both the property and agriculture lines over a five-ten-year time horizon. This included assessing the large losses that occurred for the major agriculture insurance markets in both India and Brazil, the two countries that the assessment focused on.
In the paper, SCOR said that due to climate change, temperature increase is the main driver for yield changes, which ultimately has a negative impact on crop growth in both India and Brazil.
Precipitation was also considered, but not found to be a major driver of yield changes because average precipitation changes for India are small.
SCOR said that their pricing approach captures changes in yield trends and the increasing probability of severe drought, which leads to an increase in loss costs largely mitigated by new technology and improved farming practices.
SCOR said: “We expect this will continue over the next five to ten years. However, as temperatures continue to increase, the impact on crop yields may well worsen making adaptation harder.”
Source: Reinsurance News, Tailored insurance solutions for climate risk are key for agriculture: SCOR - Reinsurance News