The relevance of climate change for life insurance

Part 1 – The Risk Manager’s View

The relevance of climate change for life insurance

We are living in the Anthropocene, a time period during which human behavior is dramatically changing the atmosphere, biosphere and socioeconomic landscape. Climate change, loss of biodiversity, plastic pollution, the spread of endocrine disruptors, obesity, antimicrobial resistance, poverty and social inequality, as well as many other emerging risks and trends caused by human action, are shaping our environment, sometimes with disastrous consequences. 

The speed, size and scope of the modifications that humans are making to nature – and that in turn are impacting us – are unprecedented. We have always seen man-made developments leading to changes in health, with both positive and negative impacts, but the magnitude of climate change and its many irreversible aspects are unprecedented. Most importantly, it is happening faster than the ecosystem can adapt, leading to disruption and higher volatility. 

This means that projections of future morbidity and mortality are becoming more challenging, and we are more likely to need protection and resilience against shock events and trends. It is, therefore, imperative that companies with long-term business interests, such as life insurers, work toward an understanding of climate change and its direct and indirect impacts on that business. This may include potential upsides, such as opportunities for diversification or support of mitigation actions.

In this first part of a series of publications, Dr. Irene Merk, SCOR’s Emerging Risks Ambassador, will take the reader on a tour of the various concrete impacts that climate change as an overarching trend can have on life and health insurance risks and the related biometric developments.

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