Swiss Re announced that a presentation at its second Nordic Risk & Insurance Summit (NORIS), “will show how winter storms Anatol, Gudrun and Per are harbingers of a more stormy future in Scandinavia, leading to a doubling of insurance claims due to natural catastrophes by the end of this century.”
The forecast is based on Swiss Re’s studies of the “long term consequences of climate change for the Nordic region.” They derive from the reinsurer’s analysis of the “predicted development of winter storms in Europe” and the probable overall impact on insured losses from natural catastrophe events.
The conference also covers alternative forms of risk transfer – such as catastrophe bonds, and how they “can be used to manage the financial consequences of a changing climate,” said the bulletin.
According to Swiss Re’s research,” climate change is set to trigger more frequent and more intense winter storms in the Nordic countries, causing increasing levels of damage in the longer term.” The current loss levels are around €2.6 billion ($3.5 billion), but Swiss Re said that, “assuming a normal, linear progression this figure could increase each year by around €11 million [$15 million]. Based on a typical year’s expected claims experience, this could mean a doubling of insured storm losses in Scandinavia between now and the end of this century.”
Swiss Re “storm specialist” Ulrich Ebel plans to tell delegates at the conference: “While, as members of the wider general public, we can all play a part in limiting the impact of climate change, the (re)insurance industry itself is well prepared to help society and business address its impact.”
Insurance linked securities (ILS) are one of Swiss Re’s most favored solutions. The reinsurer has been a leading force in expanding this market, starting under the leadership of former CEO John Coomber, and continuing under its current head Jacques Aigrain. ILS offer forms to implement alternative risk transfers (ART’s) as additional ways of “tackling the financial consequences of climate change that goes well beyond offering traditional property insurance.”
Swiss Re has been a leader in developing ART’s, such as catastrophe bonds, as “an innovative method of transferring risks to capital markets to create capacity for major risks such as storms,” said the bulletin. “Investor appetite for ILS has shown a strong increase in recent years. So far this year its Capital Markets division has placed “$2.3 billion out of total of approximately$5.7 billion worth of non-life issuance.”
According to Luca Albertini, Managing Director of Swiss Re’s Capital Management and Advisory: “The insurance-linked securities market is likely to continue to grow rapidly over the coming years. Swiss Re aims to maintain its leading position as structurer and underwriter, due to its focus on insurance risk and given its unique combination of understanding insurance risk, risk taking appetite and profound knowledge of the insurance investors in the capital markets.”
Source: Swiss Re – www.swissre.com
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