Insurers to play key role in climate adaptation: Zurich

The insurance industry has a “defining role” to play in climate adaptation, by protecting against future climate-related risk and quantifying the impact, Zurich says, adding that past weather statistics are “no longer valid”.

Use of open-source hazard data, climate risk models and breakthroughs such as machine-learning algorithms by insurers can help society adapt as floods, drought and fire take an increasing toll, the insurer says.

“Better data, modelling and innovation are the opportunities before us,” Zurich Resilience Solutions EMEA Lead Ruben Torres Rico said. “We have to act now because climate change isn’t going to stop tomorrow.”

Adaptation to extreme-weather events will be a priority issue at next month’s COP 27 climate meeting in Sharm El-Sheikh, Zurich says, noting “wildfires near the Chinese city of Chongqing, heatwaves across Europe, floods in Pakistan and tornadoes in the US”.

Extreme-weather events cost the global economy $US329 billion ($524 billion) last year.

Zurich Flood Resilience Program Lead Michael Szönyi says current decisions should be based on likely changes in tomorrow’s weather patterns rather than “basing calculations on past records”.

“The statistics of the past are no longer valid,” Mr Szönyi said, adding insurers offer expertise in risk-modelling. “We want to understand what the hazard conditions are going to be in 2050.”

Investing just 1% of the project cost can prepare an office or production facility for future weather events, he says, adding resorting to retrofitting is a “missed opportunity”.

Zurich wants open-source climate hazard data, which it says could contribute to a more accurate picture of risk, revealing information hazard intensity and frequency, risk-location exposure and the vulnerability of specific assets.

Greater collaboration with policymakers towards an open-source database of standardised, publicly available data could unlock huge potential and help develop more accurate tools, Mr Torres Rico says, while digitalisation and machine-learning algorithms may optimise the impact of risk finance and insurance on resilience.