This paper draws on our expertise from within Gallagher Re and from the wider finance and climate-change community to assess the scale of the risks and opportunities posed by climate change and the transition journey. Insurance plays a vital role in facilitating the transition using three key strategies:
- A scaling up of the sophistication of advisory services from client-facing insurance businesses
- The development of more advanced and granular risk-analysis models, particularly in emerging economies (bearing the brunt of the actual impact of climate change), for perils that are still poorly understood and modeled
- Innovation in products, including an increasing use of public-private partnerships as well as parametric policies
These tools aim to promote fair and sustainable risk pricing, incentivize net-zero behaviors in industries, and mobilize capital from the private sector, including (re)insurers.
