Natural disasters are now happening so frequently that reinsurers -- the firms that sell insurance to insurance companies -- are scaling back their exposure to such risks. Given the current circumstances, insurers may have little choice than increase their rates or in turn reduce the risks that they cover, which is already happening in certain countries.
are now happening so frequently that reinsurers -- the firms that sell insurance to insurance companies -- are scaling back their exposure to such risks.sense, it raises the question of whether individuals and businesses will be able to protect themselves against the effects of climate change if their insurance companies cannot even get coverage themselves.
Reinsurers identified climate change as the biggest risk they now face in a survey by PricewaterhouseCoopers and the Centre for the Study of Financial Innovation."Climate change is the number-one risk once again as reinsurers bear the brunt of the cost of catastrophe claims from an ever-increasing number of extreme weather events," the report said.
It added that"even the strongest reinsurers have now pulled back, largely through tightening their terms and conditions to limit their aggregate covers and low layers of natural catastrophe protection". According to Fitch, reinsurers are reducing their exposure to so-called secondary peril events. These are smaller weather events, which are becoming more frequent and virulent owing to climate change.Reinsurers are still offering ample cover against the most severe weather events, Fitch added.
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