An early warning system that detects increasing levels of climate impacts is being developed by academics, insurance industry partners and the Met Office.
Using decision games and storylines, the researchers will also create models of how insurers and reinsurers would respond to different levels of climate change, now and in the future.
Making sure that insurance can be provided in the face of the impacts of climate change is critical to our daily lives.
Professor Iain Clacher, Leeds University Business School
Funded by a £1.2m grant from UK Research and Innovation (UKRI) and led by the Universities of Leeds and Oxford, this work will bring together the predicted impacts of geopolitics, climate change, and regulation in one model for the first time.
It aims to create an early warning system for climate impacts like flooding or droughts, to help insurers react quickly to those situations.
Project lead Iain Clacher, Professor of Pensions and Finance at Leeds University Business School (LUBS), said: “Insurance underpins the global economy – without insurance you don’t have economic activity, so making sure that insurance can be provided in the face of the impacts of climate change is critical to our daily lives.
“Insurers are facing the impacts of climate change today, whether that is from flooding, droughts, fires or extreme temperatures. Working with partners in the insurance sector will allow us to improve our understanding of how insurers can be resilient in the face of climate change, rather than moving towards an ‘uninsurable world’.”
Researchers from the Faculties of Business, Environment and Social Sciences at Leeds, and the University of Oxford are working with industry partners including Aon UK Limited, Maximum Information, JBA Risk Management, Oak Global Oasis LMF, and the Lloyd’s Market Association Climate Risk Working Group for the project.
Professor Jason A. Lowe from the Priestley Centre for Climate Futures at the University of Leeds and Principal Fellow at the Met Office said: “This interdisciplinary project combines the latest climate science with behavioural and political sciences to provide new insight on how climate change is impacting insurers.
“The project will equip the insurance sector with new tools to understand the consequences of climate change hazards in ways that can help the sector become more resilient.”
Project co-lead Dr Sarah Sparrow, Associate Professor at the University of Oxford, said: “Many of the problems facing society today require us to build methodologies and expertise that combine and bridge traditional disciplinary boundaries. It is the co-development within this project, drawing on expertise across different disciplines and industry partners, that makes this an exciting project to work on. Through this project we can help understand the impacts of climate change on the insurance sector and build resilience for future changes as well as developing approaches that might be applied to similar problems in the future.”
The researchers hope the project will inform policy and wider society that unmanageable levels of climate change are approaching in the future. They say early warning and detection are essential to allow action to be taken today to manage this risk.