Climate change tops insurers' worries with war close behind

Climate change remains at the top of insurance companies’ biggest concerns even as Russia’s invasion of Ukraine stokes geopolitical and energy-related fears within the industry.

Global warming is considered as the biggest risk to society in the next five to 10 years for the second year in a row, according to a report released Sunday by French insurance giant AXA SA. Geopolitical instability, which ranked fourth last year, has risen to second place.

“It is clear that uncertainties have increased and keep increasing,” Axa Deputy Chief Executive Officer Frederic de Courtois said at a press conference. The current economic and geopolitical crisis creates an “anxiety-inducing environment”, he said.

Russia’s invasion of Ukraine has put the focus on war-related risks, and 77% of the 4,500 insurance professionals polled across 58 countries believe aggravated tensions could lead to a new era of world wars. Still, those risks remained a lesser concern for insurers, who stand to be among the biggest losers from climate change as rising global temperatures exacerbate physical catastrophes from wildfire to flooding.

As European countries are working to secure enough power to get through the winter after Russia stopped gas deliveries, energy-linked risks are also emerging as a worry for insurance professionals. Those risks, which were not among the industry’s top 10 risks in the past four years, are now its fourth biggest concern.