Climate and catastrophe risk, what it means for insurers
By Sesilia Nkoshi|
Climate and catastrophe risk is becoming more noticeable in insurance. It is not just something discussed at senior level anymore. It’s starting to show up in day‑to‑day work.
There are simply more events, and sometimes the impact is higher than expected. Floods, fires and storms have always been around, but the frequency and severity don’t look quite the same as before.
In the past, insurers leaned a lot on historical data. What happened before helped guide decisions, and in many cases it worked well enough. That is still part of the approach, but it is not always enough on its own anymore. The patterns are not as consistent, so it becomes harder to rely on them in the same way.
You see this when it comes to pricing. It is not as straightforward as it used to be, and there is less certainty around where things should land. There is also more focus on how risks sit together, especially in areas where losses can build up over time without being obvious at first.
Reinsurance becomes more of a factor in this environment. When losses increase, or behave differently to what was expected, reinsurance costs tend to move.
That then filters back into the market. Clients do not always see that link clearly, but it does affect pricing and, at times, how cover is structured.
From a client’s side, it can feel unclear. Premiums go up or terms change, and there is not always an obvious reason.
That is where clearer conversations help. Not getting too technical, just explaining what has changed and what is driving it.
At the same time, insurers have to manage a balance. They still need to provide cover, but they also cannot ignore the level of risk they are carrying. If that balance is off, it creates pressure later on.
Climate risk is already influencing decisions across underwriting, pricing and risk management.
That is not likely to change. It is not something with a simple fix, but it is now part of how decisions are made, rather than something that sits on the side.
– Sesilia Nkoshi is the Underwriting and Reinsurance Manager for Old Mutual Short-Term Insurance, at Old Mutual Namibia.
