Climate change is happening. Or is it? It is caused by human action. Or is it? The arguments are bantered back and forth in a crossfire of disagreement over an issue that holds political, social, and emotional significance around the world. For every position there are sympathetic experts willing to present supporting evidence, which, in turn, is inevitably skewered by those holding a contrary view.
In danger of being lost in the heat of this postulation, however, is a critical issue that could significantly affect the (re)insurance industry. Carriers need not take a side to consider climate change from a risk-assessment perspective, free from political baggage. Indeed, they should not wait for a resolution to form before they take action.
The presence of the probability of loss is incontestable, even if the underlying issue of climate change is debatable. The chance of both expensive and expansive losses resulting from climate change can be factored into the calculation of risk. That potential ought to be understood by the prudent (re)insurer.
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