The Impact of Climate Change on the Insurance Sector

One of the key tasks and core competencies of the insurance sector is to assess natural risks on a continuous basis and to manage the potential impacts of those risks. It is therefore not surprising that from the beginning, the insurance sector has been an active participant in modelling the impact of climate change and in identifying possible solutions. Before coming to our analysis of the relationship between the insurance sector and climate change, it is essential to explain key terms and basic possible impacts. For that reason, we start our paper with a brief summary of the causes of climate change and the most important groups of consequences, and a description of the European milestones on the road to the low-carbon economy. The impact of climate change on the insurance sector is explained through a German and an English example, in each case presenting and construing the assertions of a relevant study. In addition to an explanation of the differences in the approaches which are characteristic of each country, we also considered it important to outline the most important institutional viewpoints: in the German case, we mostly found examples for the insurance sector reacting in search of opportunities, while the English study is suitable to illustrate an approach that is more supervisory and risk-oriented in nature. To break new ground, we conclude our paper by addressing the likely impact of climate change on the Hungarian insurance sector.