Climate change adversely affects human health, as well as its social determinants, in numerous ways. Extreme weather events cause injuries and fatalities; nature and biodiversity loss contributes to the spread of vector-borne diseases; and climatic shifts exacerbate many chronic morbidities and can lead to displacement.

Insurers can expand their contributions in this space by building the stock of data on climate-related health risks, developing innovative products and strengthening public understanding.

According to Beinsure Media, by the middle of 2023, insured losses from climate events amounted to USD 50 billion, compared to an annual average of USD 18 bn over the past decade.

Challenges such as elevated natural disasters, increasing cost of capital, financial market volatility, and inflation risk persist.

According to Natural Disaster Trends, most natural disaster databases show a significant decline in the number of annual global events prior to 1980.

3 global drought events were among the 10 costliest disasters, which underlines the growing significance of the peril on a global scale. These occurred in the United States, Europe and China. But data analysis has not completely removed the data gap, it has made major progress in identifying a large portion of events.

S&P Global pointed in a note to rising rates and tighter terms and conditions when policies in reinsurance – insurance for insurers – were renewed during 2023. This resulted in the hardest market in decades in some lines of business.

The convergence of geopolitical and macroeconomic shocks – war in Europe, fractured energy markets, 40-year high inflation, interest rate hikes, depleted capital – as well as the second most expensive natural disaster ever, has introduced significant volatility into the market.

Fitch has updated its global reinsurance forecast and anticipates the calendar-year combined ratio to improve by 5.5pp in 2023, driven by reduced cover for catastrophe losses.

Until now, most focus on the effects of climate change, nature and biodiversity loss on the insurance industry has been directed towards property and casualty business lines. While the short-term consequences for health and life (H&L) insurers have been modest so far, it may be erroneous to assume that this will continue in the longer-term for the reasons discussed above.

Public-private collaborations can be stepped up to create an ecosystem of preventative strategies and related actions to implement them. Examples include teaming up to build EWS and evacuation protocols, or strengthening clinical professionals’ training on climate-sensitive health diagnoses.

Climate change poses a global threat and financial risk. The United Nations World Meteorological Organization recently reported that greenhouse gas concentrations continue to rise, with fossil fuel emissions now exceeding pre-pandemic levels.

In a global study of all deaths related to climate change, the numbers were strikingly disparate, with 130, 75 and 92 deaths per million occurring in low, lower-middle- and upper-middle-income countries, respectively, compared to just 18 deaths in high-income nations. The lower mortality in high-income countries reflects, in part, the level of investments in early warning systems and emergency preparedness, combined with relatively resilient health systems.

Now, more than ever, the science of climate change and its associated risks have become pivotal considerations for societal welfare and economic prosperity, as well as for the insurance industry, given that climate-related risks are increasing at an unprecedented rate.

Climate data elements have become a standard feature of the GME, providing a global baseline of climate risk data for the insurance sector. This year, data was collected from individual insurers to complement the sector-wide data provided by supervisors.

The IAIS noted that the UN report highlighted the insufficiency of current mitigation pledges to achieve the Paris Agreement. Global warming in the 21st century is projected at 2.8°C if current policies continue or 2.5°C if new pledges are fully implemented.

Enhanced action is necessary to prevent continued warming and the increased likelihood of irreversible climate changes. However, near-term energy shortages are causing many countries to rely on fossil fuels, making it harder to meet net-zero targets.

In the insurance industry, understanding of the risks related to climate change is mostly concentrated in P&C business lines as well as investments.

While the short-term consequences for health and life (H&L) insurers have so far been modest, it may be erroneous to assume that it will remain that way in the longer-term considering the increasing frequency and severity of climate events and shifts underway.

Insurance supervisors must better understand the type and magnitude of climate-related exposures in the industry to inform effective supervisory responses. The analysis focuses on insurance sector investments in the general account, excluding unit-linked products or separate accounts, as policyholders bear their risks.

The improvement in climate-related data collection this year compared to last year is noteworthy, and the additional contributions and effort put in by relevant jurisdictions are welcome.

Climate change leads to adverse health outcomes, some of which are immediate and others more long term. These encompass injuries and fatalities resulting from extreme weather events; infectious diseases (including air, water and vector borne); heat-related illnesses; respira-tory conditions; chronic diseases; malnutrition stemming from climate -induced disruptions to food systems; mental health issues after extreme weather events; and anxiety related to the long-term consequences of unmitigated climate change.