Document summary
The +2°C scenario is out of reach and climate change is likely to bring new weather extreme s challenging the resilience of companies' operating results and assets. Hurricane Sandy was only an early signal of future changes: studies point to a ~70% upside risk in storm damage potential in Europe and the US. As part of Kepler Cheuvreux's Adaptation series, this report assesses exposure of European (re)insurers to underwriting risks in a changing climate.
The report first identifies insurance lines and countries the most adversely exposed to climate change impacts, and proposes an in-house risk exposure rating, based on companies' business and geographical exposures. Property insurance in the UK notably appears as a hot spot. Pure life insurers are much less concerned.
In the long term, reinsurers are expected to benefit from increased retrocession of weather risks from insurers. Despite projected increase in EU and US hurricane damage of 70%+ under climate change scenario, the risk of default for European reinsurers remains low in Kepler Cheuvreux's view, especially for Hannover Re - the least exposed.