Climate disasters call for new insurance policies
As weather-related catastrophes become more frequent and more costly, insurers and reinsurers are being pushed to rethink how protection is designed. Traditional indemnity cover, which pays only after a loss has been assessed, can leave governments and businesses waiting months for funds when they need them most.
One response has been the growth of programs built jointly for the public and private sectors. These can include parametric covers that pay out when a measurable trigger, such as wind speed or rainfall, is reached; risk pools that let several regions share exposure; and catastrophe bonds that bring capital-market investors into the risk.
Reinsurers play a central role because they can spread climate risk across geographies and over time. The challenge for the industry is to price these covers sustainably as the underlying hazard keeps changing, while keeping protection affordable for the communities most exposed.