How the Insurance Industry Is Dealing With Climate Change

When it comes to the calculating the likelihood of catastrophic weather, one group has an obvious and immediate financial stake in the game: the insurance industry. And in recent years, the industry researchers who attempt to determine the annual odds of catastrophic weather-related disasters—including floods and wind storms—say they’re seeing something new.

Climate change means more frequent wind
storms, increasing the level of risk taken
on by insurance firms.

“Our business depends on us being neutral. We simply try to make the best possible assessment of risk today, with no vested interest,” says Robert Muir-Wood, the chief scientist of Risk Management Solutions (RMS), a company that creates software models to allow insurance companies to calculate risk. “In the past, when making these assessments, we looked to history. But in fact, we’ve now realized that that’s no longer a safe assumption—we can see, with certain phenomena in certain parts of the world, that the activity today is not simply the average of history.”

Read the story on the Smithsonian by Joseph Stromberg - “How the Insurance Industry Is Dealing With Climate Change.”