As early as 1994, the insurance and reinsurance companies saw the potentially cataclysmic impact that climate change could have on their businesses, not only reducing profits, but even bankrupting them if they were not paying close attention to the trend lines of climate change. Meantime, billion- dollar disasters that have exploded around the world are growing ever more ominous. Not only does climate change wreak its destructive power on communities and businesses, but it is exacerbated by people moving closer to the sea or closer to rivers and exposing their lives and property to ever greater damage and loss. Inland cities and states are also harmed by droughts and fires and a host of knock-on climate effects. Nor have ecosystems and farmlands been spared, and such losses mean famines, higher food prices, and less access to free ecological goods like clean water.
The titans of reinsurance and insurance have a decisive role to play and must be part of any solution. People and businesses must be able to protect their property with insurance and therefore insurance must be available and affordable. Coverage must also be extended to the poor and governments must be engaged with companies to make sure they are not left to fend for themselves as disasters gather. One bright spot is that some companies are beginning to see how their long- term liabilities are aligned with the long-term investment needs of infrastructure. The emergence of a new asset class around infrastructure could be a strong option for insurance and reinsurance company portfolios.
