Insurance Exposures in a Dynamic Business Climate

Some risks don’t arrive with thunder. They arrive quietly the day your insurer says: “We can’t cover this anymore.” For a very long time , insurance has played the role of invisible promise behind the global economy. Factories burned → claims paid. Floods hit → businesses rebuilt. Trade continued. That quiet promise built modern supply chains. Climate change is breaking it. New SEI working paper shows something uncomfortable: the very system designed to absorb shocks ( insurance and reinsurance) is now under stress as risks become systemic, correlated, and cascading across borders and sectors. Look at the math: EU agriculture loses ~€28B every year to extreme weather. 2024 global catastrophe losses: $318B. Insured: $137B. Losses rising 5–7% annually. That gap is brutally exposing limitations of the current risk handling mechanism and modern supply chains. Because modern supply chains were built for efficiency not resilience. One flood stalls logistics → factories idle continents away. One drought slows the Panama Canal → food and energy shipments choke. One heatwave → labour productivity quietly collapses. You can't categorise this as small shocks. It’s everything breaking at once. Insurance was designed for independent risks. Climate risks now move together. When ports, crops, power, and workers fail all at once , diversification disappears. So the consequences are already here: → Insurers exiting high-risk zones → Premiums unaffordable for SMEs → Widening protection gaps → Models based on yesterday’s weather → Workers’ health and productivity largely uninsured Consequence: Risk isn’t being transferred anymore. It’s being pushed downstream to small businesses, governments, and the most vulnerable people. We can't call it protection. That’s displacement. But there is one shift leaders should care about: Insurance can move from paying for damage to preventing damage. Lower premiums for resilient assets Parametric & business interruption cover for fast liquidity Visibility into Tier-2/3 suppliers Public–private risk pools Pricing that rewards adaptation After all we have to keep in mind : when insurance retreats, capital retreats. When capital retreats, growth retreats. Uninsurable becomes uninvestable. Resilience becomes creditworthiness. This isn’t about ESG conversation anymore. It is becoming balanced sheet decision. Ultimately next decade won’t ask: “Are you insured?” It will ask: “Are you still insurable?” Refer attached report for detailed insights.⬇️ #ClimateRisk #Insurance #RiskManagement #SupplyChain

Global events are no longer “over there” problems, they’re showing up directly on balance sheets. Ongoing conflict in the Middle East and disruptions in the Red Sea have created ripple effects across global supply chains. Businesses are facing longer transit times, rising shipping costs, and unexpected delays that impact revenue, inventory, and customer commitments. But here’s the bigger issue: many companies assume their insurance will respond to these disruptions. In reality, most policies are designed to cover physical damage, not the downstream impact of geopolitical instability. That means exposures like: • Supply chain interruptions without property damage • Delayed or rerouted shipments • Supplier or vendor shutdowns overseas …may not be covered under standard programs. This is where gaps often surface in: Contingent Business Interruption (CBI) Trade Credit Insurance Marine Cargo and transit coverage The businesses best positioned right now are the ones proactively reviewing how their insurance aligns with today’s global risk environment, not last year’s. If your operations rely on international suppliers, manufacturers, or shipping routes, it’s worth asking: Would your current program actually respond to a disruption like this? Happy to share insights or walk through what we’re seeing across the market. #RiskManagement #SupplyChain #BusinessInsurance

I am happy to co-author this article with Beatrice WEDER DI MAURO, President of the CEPR - Centre for Economic Policy Research, reflecting on the urgent need to engage in collective thinking and action to adapt our response to the challenge of insurability in the face of escalating climate risks. This article, which captures key convictions from our joint workshop hosted at Collège de France by the AXA Research Fund and CEPR - Centre for Economic Policy Research, couldn't have been more timely.   Devastating floods in Valencia, the wildfires in Los Angeles, the typhoons in Mayotte and La Réunion... These recent climate catastrophes show a clear reality: climate risks are intensifying and the protection gap for local communities and economies are becoming evident. Global economic losses from extreme weather events reached $320 billion in 2024, while in Europe, only 25% of economic losses were insured - leaving individuals, businesses, and communities vulnerable.    To address this, we need to enhance risk-sharing mechanisms and promote partnerships between public institutions and private companies.   Ensuring insurance accessibility and effectiveness is crucial. This can be done through: ➡️ Hybrid models, combining market mechanisms with public-private partnerships, to help ensure broad coverage and affordability. France’s CatNat regime and Switzerland’s hybrid model offer valuable insights. These models can be adapted to regions facing extreme exposure, such as sea level risks. ➡️ Greater investment in prevention and risk-sharing mechanisms. Initiatives like local municipal risk assessments can help small municipalities assess and mitigate local climate risks. ➡️ Impact underwriting, where insurers incentivize policyholders to adopt risk-reducing measures in exchange for lower premiums. ➡️ Public education on climate risks and stronger coordination between insurers, governments, and consumers to ensure preventive measures are taken seriously.   As we move forward, it's clear that policymakers, insurers, and society must work together to strike a sustainable balance between affordability and fiscal viability. This is not just about who pays the bill. It is about how we manage risk in an increasingly uncertain climate landscape. Let's continue to foster collaboration and innovation to close the protection gap and build a resilient future. 👇 https://lnkd.in/er6BkrtZ

Two trillion dollars. That is the cost of climate disasters over the past decade. Last year alone, extreme weather wiped $320 billion off the global economy. These aren’t future projections or “worst-case scenarios”. They are line items on today’s balance sheets. After a career spent managing risk – including leading Lloyd’s of London – I’ve seen this story before. Climate risk is following the same trajectory as insurance risk: once exposure is clear, markets reprice quickly, premiums rise, coverage shrinks, and businesses are left scrambling. That’s why managing climate risk is now non-negotiable for business. Today, I see two forces shaping board agendas: → Physical risk from floods and storms damaging infrastructure, to heat reducing productivity and drought disrupting supply chains. → Transition risk from tighter regulation and carbon pricing to stranded assets and shifting market demand. There are actions businesses can take today to mitigate both. I’ve set these out in my latest op-ed with @Reuters: https://lnkd.in/eDafmRtJ My perspective has been sharpened through my work with @South Pole, where we see first-hand that real leadership lies in converting insight into credible mitigation and adaptation plans. Better to act now than to pay more later. #ClimateRisk #BusinessRisk #SustainableBusiness #Davos2026

𝗜𝗳 𝘆𝗼𝘂𝗿 𝗯𝗼𝗮𝗿𝗱 𝗺𝗲𝘁 𝘁𝗼𝗱𝗮𝘆 𝗺𝗼𝗿𝗻𝗶𝗻𝗴 𝘁𝗼 𝗱𝗶𝘀𝗰𝘂𝘀𝘀 𝗞𝗲𝗻𝘆𝗮’𝘀 𝗿𝗮𝗶𝗻𝘀 𝗮𝗻𝗱 𝗳𝗹𝗼𝗼𝗱𝗶𝗻𝗴, 𝘄𝗵𝗮𝘁 𝘄𝗼𝘂𝗹𝗱 𝗱𝗼𝗺𝗶𝗻𝗮𝘁𝗲 𝘁𝗵𝗲 𝗮𝗴𝗲𝗻𝗱𝗮: 𝗖𝗹𝗮𝗶𝗺𝘀 𝗽𝗿𝗲𝘀𝘀𝘂𝗿𝗲𝘀 𝗼𝗿 𝗖𝗮𝗽𝗶𝘁𝗮𝗹 𝗿𝗲𝘀𝗶𝗹𝗶𝗲𝗻𝗰𝗲? Heavy rains and flooding are again disrupting households and businesses. For insurance and financial institutions, this is not a seasonal headline. It is a governance and strategic risk test. If I were sitting in that board or executive committee today, my focus would be structured and data-led: 🟢𝗣𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼 𝗰𝗼𝗻𝗰𝗲𝗻𝘁𝗿𝗮𝘁𝗶𝗼𝗻 𝗶𝗻 𝗳𝗹𝗼𝗼𝗱-𝗽𝗿𝗼𝗻𝗲 𝗴𝗲𝗼𝗴𝗿𝗮𝗽𝗵𝗶𝗲𝘀 What percentage of our motor, property, SME and agriculture exposure sits in high-risk counties? Have we mapped this against forward-looking climate data rather than relying solely on historical trends? 🟢𝗟𝗶𝗾𝘂𝗶𝗱𝗶𝘁𝘆 𝗮𝗻𝗱 𝗿𝗲𝗶𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 𝗿𝗲𝘀𝗶𝗹𝗶𝗲𝗻𝗰𝗲 If claims spike over the next 30 to 60 days, are our capital and liquidity buffers sufficient? Have aggregation thresholds and recoverability risks been reviewed in real time? 🟢𝗕𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝗶𝗻𝘁𝗲𝗿𝗿𝘂𝗽𝘁𝗶𝗼𝗻 𝗲𝘅𝗽𝗼𝘀𝘂𝗿𝗲 How many SME clients have adequate business interruption cover? What is the economic ripple effect if recovery timelines extend beyond physical damage? 🟢𝗜𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗽𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼 𝘃𝘂𝗹𝗻𝗲𝗿𝗮𝗯𝗶𝗹𝗶𝘁𝘆 What exposure do we hold in real estate, infrastructure or listed entities operating in affected regions? Have we assessed potential impairments, valuation pressure or credit deterioration? 🟢𝗚𝗼𝘃𝗲𝗿𝗻𝗮𝗻𝗰𝗲 𝗮𝗻𝗱 𝗱𝗶𝘀𝗰𝗹𝗼𝘀𝘂𝗿𝗲 𝗮𝗹𝗶𝗴𝗻𝗺𝗲𝗻𝘁 Are climate scenarios formally embedded within enterprise risk management in line with IFRS S2? Can we evidence active board oversight of climate-related financial risk, not just disclosure compliance? 🟢𝗛𝗲𝗮𝗹𝘁𝗵 𝗶𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 𝗲𝘅𝗽𝗼𝘀𝘂𝗿𝗲 Are claims rising for waterborne diseases, injuries, or chronic care disruption in flood-affected areas? Do our health portfolios incorporate forward-looking climate risk scenarios? Are emergency response protocols, telemedicine or proactive client engagement strategies in place to mitigate financial and reputational impact? Climate volatility is no longer a peripheral consideration; it is central to financial strategy. It requires disciplined underwriting, forward-looking scenario analysis, prudent capital allocation and product design that narrows protection gaps across all business. 𝗧𝗵𝗲 𝗿𝗮𝗶𝗻 𝘄𝗶𝗹𝗹 𝗽𝗮𝘀𝘀. 𝗧𝗵𝗲 𝘀𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗮𝗹 𝗿𝗶𝘀𝗸 𝘄𝗶𝗹𝗹 𝗿𝗲𝗺𝗮𝗶𝗻. #ClimateRisk #SustainabilityLeadership #InsuranceIndustry #FloodResilience #KenyaRains

New report! How are insurers managing the risks and opportunities of climate change? We spoke with 50 of them across the world to find out! Really proud of D. A. Carlin and Company's latest collaboration with MSCI Institute on this important piece. Featuring forwards from leaders at United Nations Environment Programme Finance Initiative (UNEP FI) and Lloyd's Market Association, here are 3 things we found: -A looming infrastructure insurability crisis- Infrastructure insurability crisis: 96% of insurers see a coming market failure -A model timing problem- Today fewer than 1 in 5 insurers meaningfully integrate forward-looking climate scenarios into pricing, but nearly 90% say they would if scenarios focused on 2030 instead of 2050. -Areas for growth- Insurers view climate advisory as the best new opportunity today and see opportunities in adaptation, nature, and resilience tomorrow Check out the full report below and do get in touch if you'd like to learn more about what the market is doing! #insurance #climate #climaterisk #climatefinance #adaptation Caitlin Williams Pam Palena Rumi Mahmood

I appreciated the opportunity to speak with Insurance Business America on the evolving E&S market. My view: E&S has shifted from primarily cyclical to increasingly structural. We’ve built capacity, wholesalers have professionalized, and carriers are investing in dedicated E&S capabilities — making it a permanent part of the insurance ecosystem. Key drivers: greater risk complexity (climate, infrastructure, social inflation), faster-moving exposures like cyber, and expanded wholesale distribution. Data and real‑time analytics are essential to underwrite and price these risks effectively. Watch list: cyber (under‑penetrated) and property (structural demand but cyclical pricing). Potential headwinds include regulatory scrutiny and excess capital. What matters: disciplined underwriting, strong carrier‑wholesaler collaboration, and contemporary data. It’s relatively easy to enter E&S; it’s much harder to stay and perform. I look forward to continuing the conversation with peers and clients on how we keep the market healthy, responsive, and data-driven. You can read the full article here: https://lnkd.in/eA2ts2tZ #ESInsurance #Ironshore

Two weeks ago, reflecting on the impact of Hurricane Melissa, I wrote about why Jamaican businesses must move from recovery to resilience. This week, I want to go one step further. Across global markets — and acutely here in Jamaica — climate risk has moved from an environmental concern to a balance-sheet reality. Asset values, insurance availability, borrowing costs, liquidity, and even long-term competitiveness are now directly shaped by climate exposure. That is why climate resilience can no longer sit at the margins of sustainability reporting. It is now a CEO–CFO strategic mandate. In this article, I explore: • Why climate risk is now embedded in financial statements • How CFOs must integrate climate risk into valuation, capital planning, and liquidity management • Why boards must treat resilience as a fiduciary responsibility — not an operational afterthought For Jamaica — one of the world’s most climate-exposed economies — this shift is not optional. It is foundational to financial stability and long-term growth. Resilience is no longer about bouncing back. It is about protecting and strengthening the balance sheet. Read the full article here: 🔗 From Climate Risk to Balance Sheet Risk: Why Climate Resilience Has Become a CEO–CFO Strategic Mandate https://lnkd.in/e-3zaJyd #ClimateResilience #CEOAgenda #CFOAgenda #BoardGovernance #EnterpriseRisk #JamaicaBusiness

A quiet shift is underway in the Caribbean insurance industry. Not because the sector is weakening, but because the environment around it is changing faster than many of our systems were designed for. Across the region, life, health and pension systems sit at the intersection of demographics, healthcare capacity, climate exposure and economic resilience. The challenge for our industry is not simply identifying risks. It is recognizing the signals early enough to adapt. Several structural shifts are already emerging: ⚕️Longevity vs retirement sustainability - aging populations and growing pressure on pension systems. ⚕️Healthcare inflation - chronic disease and rising treatment costs straining health insurance models. ⚕️Climate exposure - extreme weather increasingly affecting health outcomes and economic stability. ⚕️Capital market constraints - limited long duration investment assets to support pension and life liabilities. ⚕️Digital transformation - significant opportunity, but also cybersecurity and governance risks. None of these risks exist in isolation. Which means the path forward critically depends on stronger partnerships across the ecosystem between insurers, governments, healthcare providers, technology experts, regulators and capital markets. The resilience of the Caribbean’s financial protection systems will depend not just on how we manage risk, but on how early we recognize the signals and act together. Curious to hear how others across the region are thinking about these shifts.