SIGNIFICANCE OF CLIMATE CHANGE FOR AGRICULTURAL (RE)INSURANCE 

Anthropogenic climate change is associated with changes in severe weather affecting agriculture such as heat waves, heavy precipitation, and drought (IPCC, 2021)¹. The impact of climate change on agriculture is relevant in both economic terms and in terms of food security. This Technical Newsletter focuses on agriculture insurance in India and Brazil. Both countries have a significant agricultural sector and a large and expanding agriculture insurance market, so, assessing the risk associated with climate change and agriculture is important from an insurance point of view. Increasing scrutiny from regulators, rating agencies and investors provides further reason to act.

The impact of climate change risk is not yet sufficiently investigated and quantified in the insurance industry. SCOR has developed a framework to assess the impact of climate change on key natural perils that affect insurers and reinsurers. This Technical Newsletter is the second in a five-part knowledge series, where we set out to quantify potential (re)insurance loss impacts on the property and agriculture lines over a 5 to 10-year time horizon. The first part of this Knowledge Series (Seria and Herboch, 2021)²  gives further background. This second part is focused on the agriculture line of business and presents an assessment of the impact of climate change on gross modelled attritional and large losses for the major agriculture insurance markets of India and Brazil.

⁽¹⁾ IPCC Climate Change 2021: The Physical Science Basis. Summary for Policymakers [Report]. - [s.l.]: Cambridge University Press. In Press., 2021. - p. 1535
⁽²⁾ Seria Junaid and Herboch Ivan Modelling Climate Change for the (Re)insurance Industry. A Practitioner’s Guide to Extreme Event Scenario Analysis [Report]. - Paris: SCOR P&C Strategy and Development, 2021