Sources: NBC, The Balance.com, The Conversation.com, icfdn.org, tradingeconomics.com
The opportunity for underwriters
The outlook for the most vulnerable regions can look bleak, but a growing awareness of the global effects of climate change can present opportunities for underwriters.
“Improving our understanding of climate effects can help us to support our clients in markets where there is a heightened perception of natural catastrophe risks affecting the economy or political situation,” says Chris Quaey, an ArgoGlobal CPR underwriter.
“We see opportunities to take attractive, well-priced transactions in strong emerging markets as clients look to hedge their investments and assets,” he says. “As lenders and investors increasingly factor environmental and climate change threats into their own risk assessments, we’re starting to see good risks, which traditionally may not have been insured in our market.”
Climate change risk assessment of the political landscape
Argo provides policies that protect clients’ investments against unexpected political scenarios, including coups, war or terrorism. Recognising how severe weather events, such as droughts or flooding, could negatively affect political stability is becoming an essential aspect of overall risk assessment.
“Water insecurity is becoming a big issue in Northeast Africa and the Middle East,” Quaey says. “Droughts can increase food prices, displace populations and cause political unrest whilst ways in which neighbouring countries exploit regional water sources can severely affect relationships, ultimately increasing the threat of conflict.”
The future for less-developed countries