Climate change promotes risk market development: Fitch – Artemis.bm

In a new report, the rating agency Fitch says that climate change will encourage the development of the risk business market, as the need for protection increases and capital markets provide a source of support to help deal with climate-related disasters.

While the reinsurance market is facing challenges from major economic factors such as inflation, a persistent risk is that “losses from climate-related catastrophes may increase as the climate continues to change,” Fitch Ratings explained today.

Reinsurers are increasing their risk mitigation capabilities, to better manage the risks and uncertainties surrounding climate change, Fitch says.

They are also reviewing risk management strategies and how to manage disasters, while looking to measure natural risk losses in underwriting, pricing and investing.

Of course, this also means focusing on retrocessional reinsurance and using third-party funds to deal with disaster exposure and uncertainty surrounding weather-related events.

Because of this, Fitch Ratings says, “We expect the disaster market to continue to grow, due to the rise in stress amid climate change.”

Continued growth in the risk bond market is forecast, with Asia being the focus of the report.

But, the same is true in the world, where the reinsurance and insurance companies are also struggling with the uncertainty and volatility of the loss events related to the weather and trying to protect their security against them.

“The demand for bonds issued through private and ILS is growing,” says Fitch, adding that regular payments to the insurance sector through ILS instruments are now being seen in Asia.

“Insurers must face continued challenges in mitigating risks as climate volatility increases,” which the trust’s organization believes will continue to promote disaster risk management, as one tool to help insurers mitigate climate risks.

Although reinsurers in Asia have a lot of capital, Fitch sees them increasingly moving to capital markets to support reinsurance and reinsurance, especially to help deal with climate risks, it seems.

Of course, climate change is not only what motivates the interest of the insurance and reinsurance market to better protect itself and protect itself from temporary and catastrophic natural damage, but also with the recent history of losses and the availability or cost of other closing methods, especially in retro markets. .

But, as climate concerns are linked to extreme weather and industrial losses are on the rise, the cat alliance should be seen as a tool to help capital markets find solutions to financial problems caused by climate-related disasters.

When Fitch talks about promoting the development of the disaster building market, he actually means about the services and books provided.

However, we strongly believe that climate change will stimulate the development of the market to provide better solutions for climate change ILS, as well as long-term instruments that can also provide financial protection against climate change.

At the heart of this issue, capital markets that support risk adaptation have an important role to play in supporting climate change and mitigation efforts, so we hope that risk adaptation tools will be integrated with climate change by countries and businesses around the world.

The cat community needs to do something about it, by funding risk-taking projects to help protect the economy and absorb climate risks.

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