As climate-related disasters become more severe and frequent, insurers and governments face an economic black hole.
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The insurance industry specializes in understanding the nature of risk, and in estimating the likelihood, and cost, of future damages that can result.
A major challenge for the insurance industry is to understand how climate change alters the likelihood of future natural disasters, from floods to wildfires, and how to accurately reflect these risks in the premiums it charges to consumers and businesses.
Carolyn Kousky, executive director of the Wharton Risk Center, takes a look at insurers’ struggle to manage natural disasters of unprecedented scale, the challenge of communicating climate risk, and how climate risk is being felt in the energy industry.
Carolyn Kousky is executive director of the Wharton Risk Center at the University of Pennsylvania. Her work focuses on disaster insurance markets and policy responses to changes in extreme events arising from climate change.
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