Insurance and Climate Change column

Zurich Offers ‘Roadmap’ to Prep Businesses, Governments for Climate Change

By | May 2, 2025

A new paper from Zurich calls out an “alarmingly bleak” outlook thanks to climate change driving the frequency and intensity of extreme weather and increasing the likelihood of natural catastrophes.

However, the paper takes an optimistic stance that there are numerous steps that can be taken now to prepare—and insurers have a “key role” to play in that preparation.

The paper from Zurich Insurance Group released this week lays out a roadmap for governments, insurers and communities to work together to prepare for the challenges.

“From tornados and hurricanes to flooding and wildfires, extreme weather events are taking a significant and rising toll—both economic and human—across the world,” the paper states. “Over the past decade (2014-2023) they have resulted in approximately $2 trillion in economic losses.”

The paper makes three recommendations:

  • Prioritize investment in risk prevention and reduction, leveraging insurance expertise.
  • Expand access to insurance through supportive policy frameworks.
  • Develop public-private risk-sharing mechanisms to ensure protection over the long-term.

According to the paper, the insurance industry has a big role to play because it has the expertise to help business and people develop greater resilience to extreme weather and natural catastrophes with insights that the industry already uses to provide financial advice to companies, governments and municipalities on dealing with risk.

This expertise includes advanced modeling and risk assessment tools that can accurately predict the potential impact of extreme weather events and help customers identify vulnerabilities, according to the paper.

South Korea Wildfires

Climate change made the weather conditions leading to the deadly wildfires in South Korea roughly twice as likely, World Weather Attribution asserts.

Spread by strong winds in bone-dry conditions, the dozen-plus wildfires in late-March were collectively the country’s largest on record, burning than 118,610 acres and killing 32 people.

Spring is the season the area commonly experiences wildfires, but this season saw exceptionally low rainfall in the months preceding the wildfires and temperatures more than 10C above average on the days of the outbreak, so a group researchers of undertook an attribution study on the conditions.

World Weather Attribution, which is comprised of researchers from several institutions to work with climate scientists and other experts, looked at the five-day maximum Hot-Dry-Windy Index in March over all of South Korea.

The index multiplies the maximum wind speed with the maximum vapor pressure deficit—which combines temperature and humidity to define the drying power of the atmosphere—that reflects high fire risk. They also analyzed rainfall between February and March over the region.

They found that the conditions—the combination of high temperatures, low humidity and high wind speeds observed over the five days when the fires broke out—are expected on average about once every 300 years.

More Attribution Research

Scientists have rapidly developed the ability to conduct climate attribution research, while improving their ability to track a single emitter’s influence on temperature or sea-level rise, thus advancing research into climate economics.

That research has now made it possible to quantify climate damages caused by each of the world’s biggest oil and gas companies, a paper published in the journal Nature states. And those calculations could be brought as evidence in court, according to a Bloomberg article on Insurance Journal

“This has long been articulated by the legal community as a barrier to legal pursuits for liability claims” for harmful climate impacts, the paper’s co-author Justin Mankin, a climate scientist and associate professor of geography at Dartmouth College, told Bloomberg. “Scientifically, it’s not really an issue anymore.”

The findings in the paper include:

  • The world would have become up to $28 trillion richer between 1991 and 2020 without the greenhouse gas pollution put out historically by 111 of the companies listed in the database.
  • The two biggest state-owned fossil-fuel companies, Aramco and Gazprom PJSC, are each responsible for roughly $2 trillion in lost global economic growth from extreme heat.
  • The top five emitters are responsible for increasing the intensity of a 2010 extreme heat wave in Russia by 0.27C, or 0.5F.

EU Insurer ‘Gaps’

The Bank of England is warning that banks and insurers have gaps in how they are addressing climate change risks that include flooding and extreme weather.

The BoE’s Prudential Regulation Authority instructed banks and insurers to conduct internal reviews on climate risk, with plans to check how the guidelines were being put into effect in six months, the Financial Times is reporting.

The FT report notes that the authority said British lenders were unable to fully quantify how climate change would affect their activities under different scenarios, and that most of them only consider the issue a “reputational risk” of being associated with funding fossil fuels.

According to the authority, insurers have “generally treated climate change more like a box-ticking exercise than a strategic risk,” the article states.

Insurers had also excluded “tail risks” from their scenario analysis and had focused on physical and legal risk but rarely considered risks stemming from the impact of the economy’s transition to net zero carbon emissions, the FT report notes.

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Topics Climate Change

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