insurance head insurance head Let’s hope so. Shrinking coverage and rising temperatures are a risky combination. By Mark Harris Let the best of Anthropocene come to you. Sign up for our free newsletters “Nat Cats” sound fuzzy and adorable. They’re not. Hurricanes, wildfires, flooding, extreme heat, and other natural catastrophes are now so common that the insurance industry has given them a cutesy nickname. In the year to September, the world experienced at least 51 separate Nat Cats that each caused a billion dollars or more in losses—nearly twice as many as a decade ago. Most of the damage came from storms, and that total doesn’t even include October’s Hurricane Milton blitz. “The fingerprints of climate change continue to become more evident on individual events,” wrote insurance consultancy Gallagher. The basic premise of insurance is that the premiums of the many pay for the losses of the few. But what happens when the few become the many, and losses reach for the sky? In one scenario, vulnerable parts of the world become completely uninsurable, and economic and/or natural forces dismantle communities. Adaptation happens, but it’s painful. In another, insurance is just too big and too useful to fail—it reinvents itself as a positive force in our struggle to thrive on a warming planet. Source: Gallagher Re • • • A Financial Storm Is Brewing 1. A growing protection gap. Adding up losses from Nat Cats and subtracting the amount that was insured gives your “protection gap.” This intuitive interactive tool from re-insurer Swiss Re illustrates the problem. A country with a small protection gap, like the UK at 21%, is well able to recover from climate disasters as individuals and businesses have funds to rebuild and reorganize. But in India and China, with protection gaps of over 90%, those […]
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