As the Bank of England launch their report ‘A framework for assessing financial impacts of physical climate change’, Ambiental invited select representatives from the insurance, reinsurance and risk management sectors to meet at Lloyd’s of London to discuss the framework for assessing financial impacts of climate change set out in the report.
Ambiental, part of the working group to the publication and a leading provider of intelligence from data, brought together industry specialists and guest speakers to further the debate around future financial loss modelling in light of climate change.
Justin Butler Ph.D. CEO of Ambiental said: “As London Climate Action Week is seeking to highlight, climate change is no longer a distant threat. Ultimately, we need to take steps to redress the damage done to the environment, through better modelling of future risk as the financial impacts have already been witnessed today.
We developed FloodFutures to help insurers, utility companies, local authorities, infrastructure managers and commercial developers understand and plan for long-term flood risk. From the event and the report we have seen the need for greater cooperation between risk model vendors and an understanding of the (re)insurance market.”
Guest speakers at the event included Giorgis Hadzilacos from PRA; Shane Latchman of AIR; David Martin, Ambiental’s Chief Technical Officer; Nicola Howe of Risk Management Solutions and Jessica Turner of Guy Carpenter.
The speakers presented case studies around various perils such as hail, hurricane, wind and flood which were used in the report to illustrate how the proposed framework could be implemented. There was also a question and answer session which saw the panel responding with their thoughts around the biggest challenges facing the industry as it seeks to improve catastrophe modelling and providing a few insights into what progress they were expecting to be made over the next five years.
Justin continued: “I’m delighted by the response that we had to this event, and to be able to support the Bank of England around the report. The discussion highlights the level of concern and the determination to maximise the potential of available modelling tools.
“As catastrophic climate events continue to become more regular, around the world we as an industry need to decide if we should adopt a ‘planning for the worst’ attitude. The fact that the PRA report had such a positive response – with over 2,500 downloads in the first month from its release – suggests there is a huge thirst for practical help for insurance practitioners.”
The Prudential Regulation Authority (PRA) has included a climate change component in the GIST stress test. Larger regulated life and general insurers have until end of October 2019 if they choose to respond to this exploratory exercise.
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