Investment by insurers in adaptation measures to mitigate climate risk and promote insurability will become critical in the coming years.
Rising hazard levels and uncertainty about the distribution of future losses could damage the insurance industry’s foundational investment strategies, according to industry body TheCityUK’s and Marsh’s new report.
In the joint report, TheCityUK and Marsh said that investment decisions and opportunities for insurance companies to prepare themselves against climate change’s fundamental effect on the financial sector may be held back by short-term decision-making and fragmented project pipelines.
It stressed that climate change is projected to pose a substantial risk to investability and capital markets as exposure and vulnerability levels affect valuations and capital adequacy.
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