Insurance firms around the world are going to have to wake up and hire in climate change expertise, experts predict.
The insurance industry needs to look at climate change in terms of everything from underwriting to capital management and new products and, says Jon Williams, lead partner, sustainability and climate change at PwC. It will need to hire as a result, he predicts.
“As well as technical roles, insurance firms need to recruit climate change expertise. Meteorologists, for example, could assess the risks of how the droughts in the Midwest of the US led to severely wet weather in Europe,” Williams says. “Climate change economists and scientists can look at the impact of policy responses by governments, engineers will be drafted in to assess the potential risks to renewable energy sources. The range of skills needed in this area is vast.”
Reinsurers Swiss Re and Munich Re are said to employ a 12-15-strong team of meteorologists in Europe. Neither firm responded to a request to confirm this.
Mark Bove, senior research meteorologist at Munich Re said insured losses due to meteorological perils have "increased dramatically over the past thirty years" and that meteorological expertise is useful to simulating catastrophic events like hurricanes. On a day to day basis, Bove says his team builds catastrophe models, conducts meteorological research, and educates employees and clients about natural catastrophe risk.
Meteorologists in insurance firms need business experience, computer programming skills, a solid knowledge of statistics and presentation skills says Bove.
Ironically, in the wake of Hurricane Sandy, PwC's Williams says that European firms are more prepared than their US counterparts. A report by Ceres, a coalition of investors and environmental groups, which surveyed the disclosures of 88 US insurance companies to the National Association of Insurance Commissioners, showed that only 11 had formal climate change policies and 60% were assessing climate risks.