Considering the challenges insurers have in balancing the desires of consumer advocates and reinsurers when it comes to the use of cat modeling, I can only imagine how well this recommendation by Lloyds of London will go over if it gains traction:
Lloyd’s of London is urging insurers to begin modeling for higher worldwide losses from such threats as global warming, while at the same time acknowledging that there is much uncertainty around the actual impact of climate change.
In its latest climate change report, Rapid Climate Change, Lloyd’s claims that waiting on “definitive scientific pronouncements” on the impact of climate change “seems like an increasingly risky strategy.”
“The insurance industry should start planning and modeling now for a higher level of losses across the world by the middle of the century as both the severity and frequency of weather events increase,” Lloyd’s advises in the study’s executive summary.
I do have to admit that I would be curious to see cat model output that has been influenced by the impact of certain levels of global warming.