“There is a lot they can do besides just exiting markets”


“There is a lot they can do besides just exiting markets.”



  • Recent insurer retreats due to climate change-related risks have highlighted the precarious nature of the industry.
  • These retreats result in pricier premiums, coverage uncertainty, and, in extreme cases, market exits.
  • However, the uninsured market created by such retreats presents opportunities for those willing to capitalize on it.

Insurers’ Profit Motive:

  • Insurers’ primary goal is to generate profits, but exiting high-risk markets may not always be the best strategy.
  • Insurance companies are in the business of pricing risks and should adapt to climate-related challenges.

Asia’s Unique Position:

  • Unlike North America and Europe, Asia hasn’t seen significant insurer retreats from high-catastrophe-risk regions.
  • Research indicates that only 14% of economic losses from natural disasters in the APAC region are insured, compared to the global average of around 40%.

Protection Gap and Challenges:

  • The protection gap in Asia, where many economic losses remain uninsured, creates opportunities for insurers.
  • Extreme weather events can make carriers reconsider their coverage, impacting the protection gap.

Short-Sightedness as an Issue:

  • Short-term focus can hinder insurers’ long-term strategies.
  • Annual underwriting adjustments may lead to short-sighted underwriting strategies.

Strategies for Addressing Climate Risks:

  • Prioritize regulator engagement to address climate risks effectively.
  • Explore longer-term underwriting and pricing strategies.
  • Utilize sophisticated risk mitigation measures such as catastrophe models and climate models.
  • Encourage product innovation to incentivize policyholders to reduce risks.

Future of the Insurance Market:

  • While challenges abound, there will likely still be an insurance market.
  • Viability depends on governments protecting individuals through legislation and insurers offering robust propositions.


  • Despite insurer retreats driven by climate change risks, opportunities exist in the uninsured market.
  • Insurers must adopt long-term strategies, engage with regulators, and leverage risk mitigation measures to navigate the challenges of climate change.
  • The future of the insurance market depends on a collaborative effort involving insurers, governments, and innovative solutions.

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