Lawrence Nazare, CEO of Continental Re
Climate change is no longer a distant threat; it’s a reality reshaping the landscape of industries worldwide.
Among those significantly affected are the insurance and reinsurance sectors. We are seeing the profound impact of climate change on reinsurance, both globally and within Africa.
The Unprecedented Ferocity of Climate Change – The unexpected severity and intensity of climate change events challenges the gradual and innocuous expectations held in the past. The increased frequency and severity of weather-related incidents play a pivotal role in reshaping the reinsurance landscape. The industry was unprepared for the scenarios unfolding today, rendering existing costing models obsolete.
The Changing Dynamics of Catastrophe Insurance – The escalating severity of climate change-related events has driven catastrophe insurance costs “through the roof.” The traditional private sector approach to insurability is being questioned, with a growing realisation that certain categories may no longer be viable for private risk transfer. In regions like North America, insurers are withdrawing from providing coverage due to the disproportionate impact of events like flooding and fires on their balance sheets.
Globalization of Catastrophe Risk – Evaluating the evolving nature of catastrophe risk that is transcending geographical boundaries, climate change has turned once considered low-risk regions into potential hotspots, challenging the concept of excluding territories from the global catastrophe pool. The global community is now contributing collectively to the same pool, resulting in a higher cost of providing catastrophe insurance and reinsurance.
WE’RE COMMITTED
TO PUTTING OUR CUSTOMERS FIRST
Focusing on our customers to deliver the best results.
Everyone at Continental Reinsurance has a passion
And commitment to developing ambitious products
And growing local markets. As an institution that’s
Respected across the continent, we understand that
It is consistently high performance, commitment
To the industry and dependability that will help us
Become Africa’s most responsive reinsurer.
The Trickle-Down Effect on Insured Individuals – The increased cost of catastrophe insurance and reinsurance inevitably trickles down to the insured individuals. The risk must be spread across a wider spectrum, impacting the average person on the street. This shift prompts a re-evaluation of how societies approach and manage climate-related risks.
The Evolving Role of Reinsurance: Historically reactive, reinsurance is now poised to play a proactive role in shaping society’s resilience to climate change. The wealth of information accumulated by the reinsurance and insurance sectors over the years. This knowledge can contribute to the formulation of adaptation initiatives, building codes, and construction standards that enhance community resilience.
Collaboration for a Sustainable Future: An essential element is the need for collaboration between authorities, regulators, industries, and the reinsurance sector. As climate change renders certain risks uninsurable for private entities, a multi-pronged approach, akin to the public-private partnership (PPP) model seen in South Africa and Namibia, is crucial. The conversation should revolve around creating models that not only protect the insurance sector from indeterminate risks but also ensure rapid recovery for affected communities.
In conclusion: In an era where climate change is reshaping the dynamics of risk, the insurance and reinsurance industries face unprecedented challenges. There should be urgency for collaboration, proactive risk management, and the evolution of insurance models to navigate the storm of climate change.
As we witness the transformation of catastrophe risk on a global scale, the role of reinsurance becomes pivotal in fostering resilient communities and ensuring the sustainability of the insurance industry.