New Climate Change Models Show Impact of Climate Change on Losses; Losses from Hurricanes Could Increase by 24 percent by 2050
NEWARK, Calif.-Friday 7 May 2021 [ AETOS Wire ]
(BUSINESS WIRE) -- RMS, the world’s leading catastrophe risk modeling and solutions company, revealed that according to its new Climate Change Models, and based on today’s exposures, insured average annual losses (AAL) from North Atlantic Hurricane wind could increase by as much as 24 percent by 2050*, and European Flood risk AAL could increase by up to 59 percent by 2050**, based on no mitigating factors taken.
The new RMS Climate Change Models combine the RMS financial impact modeling framework with the best climate science consensus, including from the Intergovernmental Panel on Climate Change (IPCC). Generally available in June 2021, these models provide the most comprehensive climate change insights for North Atlantic Hurricane, Europe Inland Flood, and Europe Windstorm. Each model quantifies and differentiates the impacts of acute physical risk due to variable potential climate change scenarios (known as Representative Concentration Pathways or RCPs), different time horizons, and within specific regions. This means that organizations can make more informed decisions about the impact of climate change on different physical assets and portfolios, including residential and commercial properties, warehouses, and retail chains. Further climate change models and geographies will follow this initial model suite launch.
The new RMS Climate Change Models, data, and analytics empower boardrooms and organizations to:
Better understand the impacts climate change may have on capital, assets, pricing, and risk management today and in the future for acute physical risks
Price and manage risks to better reflect changing conditions
Confidently communicate acute physical risks posed by climate change to all stakeholders
Comply with regulatory submissions, such as Task Force on Climate-related Financial Disclosures (TCFD), Environmental, Social, and Governance (ESG), and Prudential Regulation Authority (PRA) reporting, in an efficient and sustainable way, as well as addressing future regulatory reporting requirements
Quantify climate risk impacts at any scale, from individual assets through to portfolios, commercial entities, sectors, and entire markets
Commenting on the RMS Climate Change Solutions, Tom Fink, senior vice president and managing director at Trepp, said: “Our clients in the banking and commercial real estate markets are working to quantify their exposure to environmental risks. By incorporating the RMS climate risks analytics, Trepp can better help the investment and financial services industry understand the physical risks posed by a changing climate.”
Speaking at the annual RMS Exceedance conference, RMS chief research officer, Robert Muir-Wood, said: “Unpacking the risks from climate change includes many individual perils, components, and situations, some of which are profoundly non-linear. Also, when mediated through tropical cyclone size, intensity and track, winter storms or major river floods, the relationship between climate parameters and their impacts becomes highly complex and can only be captured in a full catastrophe modeling capability that we are now delivering. Clear metrics on current and future climate perils, such as those available with the RMS Climate Change Models and Solutions, are becoming vital for the insurance industry, businesses, and investors globally. Increases in frequency and intensity of hurricanes, floods, and wildfires have already driven businesses, investors, and regulators to try to assess what this means for their current and future operations.”
RMS has been modeling natural catastrophe risk for the insurance industry for more than 30 years and has been leading research into the impact of climate change on catastrophe losses since its involvement in the 2007 4th IPCC Assessment Report. The RMS Climate Change Solutions also include climate change specialist advisory and consulting expertise as well as regulatory, ESG, and TCFD support.
Learn more about RMS Climate Change Solutions here: https://www.rms.com/climate-change
* For North Atlantic Hurricane the figures are for wind only and do not include storm surge or tropical cyclone-induced flooding. Exposure is based on the 2019 RMS Industry Exposure Database for all lines of business; further changes in losses would be expected from changes in exposure. The figures are based on an RCP 8.5 scenario.
** For European Flood, exposure is based on the 2020 RMS Industry Exposure Database for all lines of business; further changes in losses would be expected from changes in exposure. The figures are based on an RCP 8.5 scenario. 59 percent is based on the very latest version of the EU FL climate change model.
About RMS
Risk Management Solutions, Inc. (RMS) helps insurers, financial markets, corporations, and public agencies evaluate and manage global risk from natural and man-made catastrophes, including hurricanes, earthquakes, floods, climate change, cyber, and pandemics. RMS models underlie the ~$2 trillion Property & Casualty industry and the many insurers, reinsurers, and brokers around the world rely on RMS model science.
RMS helped pioneer the catastrophe risk industry, and continues to lead in innovation by marrying data and advanced model science with leading-edge SaaS technology. Leaders across multiple industries can address the risks of tomorrow with RMS Risk Intelligence™ (RI), our open, unified cloud platform for global risk, enabling them to tap into RMS HD models, rich data layers, intuitive applications, and APIs.
Further supporting the industry's transition to modern risk management, RMS spearheaded the Risk Data Open Standard (RDOS), a new modern open standard data schema designed to be an extensible, flexible, and future-proof asset within modeling/analysis systems.
RMS is a trusted solutions partner enabling effective risk management for better business decision making across risk identification and selection, mitigation, underwriting, and portfolio management.
Visit RMS.com to learn more and follow us on LinkedIn and Twitter.
(C) 2021 Risk Management Solutions, Inc. RMS, the RMS logo, and RMS Risk Intelligence are trademarks of Risk Management Solutions, Inc. All other trademarks are property of their respective owners.
View source version on businesswire.com: https://www.businesswire.com/news/home/20210505005784/en/
Contacts
For More Information Contact:
Devonne Cusi (U.S.)
(U.K.) +1 551 226 1604
PRTeam@rms.com
Brian Norris, Cicero
+44 0 20 7947 5317
RMS@cicero-group.com
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