The insurance industry may be beset with disruption on all sides but one expert has said that climate change could have the biggest impact.
, a principal at Deloitte
, told Insurance Business
that the insurance industry faces multiple challenges linked to climate change.
“We talk a lot about disruption and rightly so, there is a lot of disruption going on. I do believe that climate change is going to be the biggest disruptor to our industry over the next 20 to 30 years,” Paddam said.
“It is not just the liabilities of insurers that are going to be affected it is also going to be the assets that they are invested in.
“I think that there is a big onus on the insurance industry at the moment, and brokers as well, in terms of educating clients on the changing risk. Increasing the insurers that are providing information, including flood maps, coastal erosion maps.
“I think it is in everyone’s interest that consumers understand the risks that they face.”
Following the Paris Agreement, the Green Climate Fund was established to help developing nations with disaster mitigation efforts. Paddam stressed that, as a global issue, climate change demands a global response from a mitigation standpoint.
For developing nations in Asia, it will be important to utilise the Green Climate Fund to help boost mitigation, Paddam said.
“Developing nations, particularly in Asia, are going to have increasing disasters and mitigation efforts are going to be very important to keep those economies resilient and on their feet.”
With the recent election of Donald Trump to the White House, much has been made of the possible impacts on climate change. Paddam played down the impact a Trump presidency could have on the global climate as many instruments are already in place to help curb the potentially devastating risk.
“The President of the United States has a lot of influence but it is only on the political side of it,” Paddam continued.
“We are going to see a continued investment in renewable energy for economic reasons. We are going to see people decide to move away from carbon for economic reasons.
“He is going to be in power for four to eight years and when you are making decisions, as most investors and insurance companies are for the long-term, four to eight years is not a long time.”
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