{"id":8438,"date":"2022-08-18T14:50:24","date_gmt":"2022-08-18T19:50:24","guid":{"rendered":"https:\/\/www.bbrown.com\/insight\/financial-impact-of-climate-change-esg-considerations\/"},"modified":"2022-08-18T14:50:24","modified_gmt":"2022-08-18T19:50:24","slug":"financial-impact-of-climate-change-esg-considerations","status":"publish","type":"insight","link":"https:\/\/www.bbrown.com\/ca\/insight\/financial-impact-of-climate-change-esg-considerations\/","title":{"rendered":"Insurers Are Underestimating the Financial Impact of Climate Change – ESG Considerations You Should Make"},"content":{"rendered":"

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Property & Casualty<\/p>\n

\n Insurers Are Underestimating the Financial Impact of Climate Change - ESG Considerations You Should Make\n <\/h1>\n\t\n <\/div>\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t<\/div>\n\n\t<\/div>\n\n\t\n[\/vc_column][\/vc_row][vc_row][vc_column width=”2\/3″]\n
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\n Insurers Are Underestimating the Financial Impact of Climate Change - ESG Considerations You Should Make\n <\/h1>\n\t\n <\/div>[vc_column_text]As the world and insurance marketplace continues to change, non-financial factors such as the environment, ethics and governance issues are emerging as new pillars for analyzing and making financial investments.<\/span><\/span><\/p>\n

What is ESG?\u202f<\/span>\u00a0<\/span><\/h3>\n

ESG stands for environmental, social and governance. Environmental considerations could include carbon footprint, greenhouse gas emissions, waste reduction practices or other sustainable regulations. Social factors may include breaches of human rights or labor laws or health and safety concerns. Governance describes the understanding of the responsibilities different stakeholders hold in a company.<\/span><\/p>\n

The Emergence and Importance of ESG\u00a0<\/span><\/h3>\n

Throughout the years, businesses have focused on short-term issues and putting the environment, energy, global health and climate change issues further down on their list of top concerns. However, failing to adapt business operations towards an ESG-focused agenda could increase overall long-term risk.\u202f<\/span>\u00a0<\/span><\/p>\n

Reinsurers could be underestimating their exposure to climate change and natural catastrophe risks by up to 50%. Carriers have begun to reflect the dynamic nature of climate-related risks, which is contributing to some of the volatility in the marketplace.<\/span>\u00a0\u00a0\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

As the frequency and severity of natural disasters have increased due to climate change and populations continue to grow in areas affected by these catastrophes, insurance costs are increasing.<\/span>\u00a0<\/span><\/p>\n

Failing to adapt business operations towards an ESG-focused agenda could increase overall risk. Developing ESG guidelines for your company may make it possible to find favorable terms and additional capacity.<\/span><\/p>\n

According to research by Swiss Re, the gap between incurred losses and insured losses due to natural catastrophes has steadily increased in the last 30 years<\/span>1<\/span><\/sup>. This is likely due to a combination of the following:<\/span>\u00a0<\/span><\/p>\n