Unfavourable trends in the global reinsurance market, risks related to climate change, key reinsurance and insurance companies moving away from coal – these are the most important challenges for the power insurance market in 2019 according to experts from Willis Towers Watson.
Apart from the unfavourable trends, i.e. the expected increase in costs of reinsurance and insurance, the leading insurance broker’s report makes reference to 2015 Bank of England’s PRA (The Prudential Regulation Authority) study that sets framework for analysing risks that reinsurers and insurers are exposed to due to climate change. The three categories of medium- and long-term risks are:
Physical risks – directly related to the damages and an increase in claims and
losses as a result of more frequent extreme weather events
Transition risks – risks resulting from the transformation towards a low- or zero
emission economy – financial consequences of changes (decrease) in the valuation
of coal assets and the costs of an inefficient transformation pathway
Liability risks – related to reputational risk, and cases of recognition of civil liability
of energy companies for damages caused by climate change; e.g. climate lawsuits3
The scope of what has been announced so far by the world’s largest insurance and reinsurance institutions regarding their withdrawal from coal re/insurance and investments is only a step towards keeping the temperature rise below 1.5°C. No (re)insurer, has adopted policies compliant with the objectives set by the 2015 Paris Agreement.
This briefing Challenges for Reinsurance of the Coal Sector outlines the role of reinsurance in coal expansion and the operation of existing coal infrastructure. It also showcases how the re/insurance industry’s moving away from coal impacts the coal sector locally and globally.
Here you can find the Turkish version of Report Reinsurance 2019.