Odd Lots What Extreme Weather Events Are Doing to Global Insurance Markets
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Dec 8, 2022 
In this discussion, Steve Evans, the owner and editor-in-chief of Artemis.bm, dives into the turbulent waters of global insurance markets shaped by extreme weather events. He highlights how climate change is transforming risk management approaches, particularly with adaptive pricing strategies and evolving catastrophe models. The talk also covers the rise of parametric insurance, which offers quick relief during disasters. Plus, Evans addresses the broader implications of these trends on financial stability and the need for innovative insurance products in a rapidly changing environment.
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Weather Risk Focus
- Extreme weather events are an increasing focus for the insurance industry, although it has a long history of covering such risks.
- The industry has become more sophisticated in assessing and pricing these risks, especially in the last two decades.
Impact of Weather Modeling
- Improved weather modeling, particularly catastrophe (CAT) models, significantly contributed to the growth of insurance-linked securities (ILS).
- These models provide investors with more accurate risk assessments, leading to greater confidence in pricing and reassurance in product construction for customers.
Market Size Estimation
- Estimating the exact size of the reinsurance and ILS markets is difficult due to constant fluctuations.
- However, global reinsurance capital is estimated around $600 billion, with ILS capital between $80-$100 billion.