Insurance Industry Ponders Its Next, Biggest, Risk Management Problem

The near total transformation of climate change from a retrograde political issue to a hugely expensive real-time problem has occurred over a relatively brief period of time. The insurance industry was years ahead of the political debate and is now at what might be considered the next stage: trying to figure out how to finance the cost of the damage, and in cases where the term might apply, for the cost of “remediation.” This post, from an industry website that covers “cat bonds, insurance-linked securities (ILS), alternative reinsurance capital, risk transfer, investments, longevity and weather risk markets,” is a good introduction to what is sure to become a hot topic in the years ahead. (“Cat bond” is industry shorthand for the financial instrument known as a catastrophe bond.)