Taking the long view: the wider role for modelling in tackling climate risks: RMS

As the world moves to a low carbon future the re/insurance industry—and the modelling that supports it—may find it has a wider role in climate change, says Robert Muir-Wood of RMS.

Few could accuse re/insurers of ignoring climate change. In renewal discussions, and at Baden-Baden and the Monte Carlo Rendez-Vous, it’s been perhaps the key topic. The extent to which increasing and increasingly diverse risks from climate change are reflected in cat models is among the central concerns.

As November 2021’s COP26 conference in Glasgow showed, however, the wider discussion is focused on achieving net zero carbon emissions by mid-century. According to Robert Muir-Wood, chief research officer at cat modeller RMS, it’s a discussion in which insurers have played a lesser role.

But that may be about to change. “The insurance sector tends to write one-year contracts and thus may have a limited perspective on the future, but it’s going to be challenged by regulators to look longer term,” Muir-Wood told the Re/insurance Lounge, Intelligent Insurer’s online platform for discussing the most significant issues facing the industry.