Climate Change and Index Insurance

How can the insurance industry respond to the challenge?

This briefing note summarizes the emerging issues related to climate change and index insurance, discussing how climate trends are being considered in index product design and pricing, and how this could be improved. It is intended to inform further discussion and collaboration across the insurance sector with a focus on index solutions.

The note presents the common challenges observed by index designers and risk takers in response to climate change, highlights some new approaches being undertaken by these stakeholders in relation to technical product design, processes, and actuarial approaches, and provides some recommendations on how the wider index insurance industry can continue responding to the challenges.

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