Climate Change Is Hitting the Insurance Industry Hard. Here’s How Swiss Re Is Adapting

A recent article in Fortune describes the measures that Swiss Re, the world's largest re-insurance company, are taking to adapt its business model to the realities of climate change and to divert its investments and insurance away from dirty, risky industries such as coal. For the insurance industry, 2017-18 was the most expensive two-year period of natural catastrophes and man-made disasters on record, requiring them to pay out $219 billion globally. The majority of 2018 payouts occurred in North America, triggered by wildfires, thunderstorms, and hurricanes. 

In 2016, Swiss Re began divesting in companies that derived more than 30% of their revenue from coal, or generated more than 30% of their power from it. In 2018, the company took it a step further by declining to insure pools of risk with "exposure" to coal that exceeded 30%, although this standard is only applied to the specific properties being insured rather than the entire company seeking insurance. The company recently announced plans to tighten this cap by applying an absolute cap on coal exposure to its investments, and the company plans to be carbon-neutral in both its investment and insurance portfolios by 2050. The company is also taking strides in its modeling to be able to better predict the catastrophic events that climate change has rendered more frequent and severe.

According to Kuba Gogolewski, an anti-coal activist in Poland, Swiss Re's actions could have a huge impact on the coal industry: “When you look at where climate change can be tackled, it’s actually reinsurance—and reinsurance in the most-developed countries —where we have the most leverage.”

Read the full article here.