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RISK: Insurers especially vulnerable to climate change | Canadian Insurance
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RISK: Insurers especially vulnerable to climate change

Changing weather patterns may make current catastrophe models unreliable

Financial institutions such as insurers, banks and pension funds are especially vulnerable to climate change risk, a new study from the Global Risk Institute found.

In the past decade, insurers saw losses from weather-related disasters from $10 billion to $50 billion each year, adjusted for inflation.

Read: Investors must first get serious about adapting to climate change

Over time, the study also points out, climate change may make current catastrophe models unreliable, and diminish the effectiveness of portfolio diversification and risk transfers.

Nevertheless, the industry may develop clean-tech products, such as renewable energy project insurance, and products related to public policy risk, including protection against unexpected withdrawal of environmental subsidies.

“There is no question that climate change and the reaction to it will have a material impact on financial institutions,” Richard Nesbitt, chief executive for the Global Risk Institute, said in a release. “In fact, many have already begun to feel it.”

Read: Companies know climate change is real