Press Release - MARCH 11, 2020
Best’s Special Report: Climate Change Seen as Top Insurance Industry Risk; Ranking Highlights Need for ERM
FOR IMMEDIATE RELEASE
OLDWICK - MARCH 11, 2020
The report, “The Growing Importance of Emerging Risk Management,” also provides an expanded look at the top 10 emerging risks insurers likely will face over the next decade. In AM Best’s view, climate change represents the largest of these risks. With frequency and severity of weather-related events on the rise, insurers have been impacted severely by related losses, and pricing based on past experience remains challenging as catastrophe models have not yet fully considered the new normal. Because of this and other considerations such as reserving and reinsurance, AM Best also views the industry as having low readiness to the complex challenges climate change presents.
Other leading emerging risks discussed in the report include:
The report notes that some of these risks—such as terrorism or climate change-related catastrophes—may hit quickly and abruptly, while others—such as negative interest rates, legacy systems and social inflation—may lead insurers to a slow and painful death. In AM Best’s view, insurers are better prepared to deal with the aging workforce, terrorism and low interest rates, but just moderately prepared for most of the other risks. Insurers need to continually scan the eco-system for risks, quantify the impact of emerging risks, and be proactive in designing mitigation plans in the event that these risks manifest themselves.
To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=295288 .
To view a video discussion of this report with Sridhar Manyem, director, industry research and analytics, and Christopher Lewis, industry analyst, research and analytics, both of AM Best Rating Services, please visit http://www.ambest.com/v.asp?v=emergingrisks320 .
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.