Current developments in reinsurance and the rising costs of natural catastrophe reinsurance.

Current developments in reinsurance and the rising costs of natural catastrophe reinsurance.

According to a report by www.energiezukunft.eu,

Munich Re warned of the dangers of global warming as early as 1973 and has been working intensively ever since to analyze the effects of man-made climate change. However, recent events have shown that the insurance industry, and reinsurers in particular, are struggling with the increasing costs and risks associated with natural disasters.

The increase in climate-related losses has sharply increased the cost of reinsurance, which in turn has led some reinsurance companies to reduce their natural catastrophe coverage capacity. Munich Re, on the other hand, has announced that it will expand its natural catastrophe business at higher prices. Nevertheless, environmental and human rights organizations warn that reinsurers' models for assessing the risk of climate damage have failed in recent years.

In addition, reports show that leading insurance companies and reinsurers continue to not rule out insuring fossil fuel companies such as gas-fired power plants and liquefied natural gas terminals. Although some companies have made efforts to reduce their support for fossil fuels, policies often remain ambiguous.

The impact of these developments on the market and consumers is significant. The rising cost of reinsurance could result in these costs ultimately being passed on to consumers. In addition, insurance companies' inadequate policies could hamper efforts to limit global warming.

It is critical that insurance companies and reinsurers take their role in addressing the climate crisis seriously and take steps to reduce hedging of fossil fuel companies and appropriately assess climate-related risks.

Allianz's efforts to exit all existing coal industry insurance by 2030 and reduce the carbon emissions of its portfolio are positive steps. Still, more effort is needed to mitigate the impacts of climate change and align the insurance industry to support goals to limit global warming.