Risks to the world’s oceans are severe and getting worse, yet remain a major blind spot for financial decision-makers, including insurers, according to a new report from the Institute and Faculty of Actuaries (IFoA).
The report, Ocean Maelstrom: Navigating the Climate Storm, produced with the University of Exeter and The Ocean Race, warned that ocean degradation could become catastrophic without a change of course. It argued that conventional risk assessments tend to look at hazards one at a time, and often leave out ocean degradation, tipping points and the possibility of several shocks interacting.
The report introduced the idea of Ocean Solvency, the ocean’s capacity to keep providing the services that economies depend on. It sets out Ocean Maelstrom, a plausible systemic risk scenario rather than a forecast. In it, ocean, climate and geopolitical pressures interact and cascade through food production, global trade, insurance, sovereign risk and financial markets.
The authors said some of those consequences could emerge within years rather than decades. Disruption to fisheries, rainfall, shipping, coastal infrastructure and insurance could feed through to food price shocks, higher living costs and wider inflation.
“Ocean degradation does not remain offshore. It can transmit through food production, trade, insurance and financial markets,” said Sandy Trust, the report’s lead author.
A pensions case study shows how ocean degradation could hit scheme assets, liabilities and contributions at the same time. Weaker investment returns, higher inflation and pressure on employers and households could combine to threaten the adequacy of future retirement incomes.
IFoA president Paul Sweeting said ocean health should concern governments, regulators, investors and pension funds, as well as environmental policymakers.
The report also calls on governments, regulators, investors, insurers and pension schemes to treat ocean health as critical economic infrastructure. It recommended building ocean degradation, tipping points and interacting risks into risk assessment and scenario analysis. It also calls for stronger ocean protection and restoration, and for financial structures that can direct capital towards ocean resilience. It highlights a persistent gap between international commitments and delivery.
The authors also see grounds for optimism. Ocean ecosystems can recover when damaging pressures are removed, and investment opportunities in ocean restoration and the blue economy are emerging.
Several of the report’s transmission channels are already showing up in insurance. Willis Re reported last month that shipping through the Strait of Hormuz remains severely disrupted, adding to marine and supply chain risk. Coastal flooding hit Scottish towns during Storm Boelo. Insurers including Aviva are calling for flood resilience to be built into new homes.
For insurers, the report’s central point is that risks often modelled separately, such as marine, property, crop and investment risk, may be correlated through ocean and climate systems. That matters for catastrophe modelling, aggregation and capital planning, and for life insurers and pension providers whose long-term liabilities depend on asset returns and inflation.
For brokers, the practical implications are closer to home: rising pressure on coastal property cover, supply chain disruption risk for importers, and the growing importance of resilience in keeping risks insurable. Clients with coastal sites or long, ocean-dependent supply chains may find these exposures getting closer scrutiny at renewal.
