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Insurance Companies’ Responses to Climate Change: Adaptation, Dynamic Capabilities and Competitive Advantage

Author

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  • Kristin Stechemesser

    (Chair of Environmental Management and Accounting, Faculty of Business and Economics, Technische Universit&aauml;t Dresden, Münchner Platz 1/3, Dresden 01062, Germany.)

  • Jan Endrikat

    (Chair of Management Accounting/Controlling, Technische Universit&aauml;t Dresden, Dresden, Germany.)

  • Nico Grasshoff

    (Chair of Environmental Management and Accounting, Faculty of Business and Economics, Technische Universit&aauml;t Dresden, Münchner Platz 1/3, Dresden 01062, Germany.)

  • Edeltraud Guenther

    (Chair of Environmental Management and Accounting, Faculty of Business and Economics, Technische Universit&aauml;t Dresden, Münchner Platz 1/3, Dresden 01062, Germany.)

Abstract

Drawing on the dynamic capability view, we analyse how insurers adapt to climate change impacts and how adaptation relates to corporate financial performance. Based on a comprehensive literature review, we deduce seven categories of adaptation measures associated with three dynamic capability dimensions of climate change adaptation (i.e. climate knowledge absorption, climate-related operational flexibility and strategic climate integration). Using this framework, we conduct a content analysis of insurers’ adaptation efforts as reported to the Carbon Disclosure Project. Regression analysis reveals positive relationships between climate knowledge absorption and return on assets (ROA), climate-related operational flexibility and ROA, and between the total number of adaptation measures and ROA.

Suggested Citation

  • Kristin Stechemesser & Jan Endrikat & Nico Grasshoff & Edeltraud Guenther, 2015. "Insurance Companies’ Responses to Climate Change: Adaptation, Dynamic Capabilities and Competitive Advantage," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 40(4), pages 557-584, October.
    • Handle: RePEc:pal:gpprii:v:40:y:2015:i:4:p:557-584
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    Citations

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    Cited by:

    1. Nadine Gatzert & Philipp Reichel, 2022. "Awareness of climate risks and opportunities: empirical evidence on determinants and value from the U.S. and European insurance industry," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 47(1), pages 5-26, January.
    2. Ulrike Meinel & Karl-Michael Höferl, 2017. "Non-Adaptive Behavior in the Face of Climate Change: First Insights from a Behavioral Perspective Based on a Case Study among Firm Managers in Alpine Austria," Sustainability, MDPI, vol. 9(7), pages 1-18, June.
    3. Di Tommaso, Caterina & Mazzuca, Maria, 2023. "The stock price of European insurance companies: What is the role of ESG factors?," Finance Research Letters, Elsevier, vol. 56(C).
    4. Tiberio Daddi & Niccolò Maria Todaro & Maria Rosa De Giacomo & Marco Frey, 2018. "A Systematic Review of the Use of Organization and Management Theories in Climate Change Studies," Business Strategy and the Environment, Wiley Blackwell, vol. 27(4), pages 456-474, May.
    5. Liu, Bing & Yin, Weijun & Chen, Gang & Yao, Jing, 2023. "The threshold effect of climate risk and the non-linear role of climate policy uncertainty on insurance demand: Evidence from OECD countries," Finance Research Letters, Elsevier, vol. 55(PA).
    6. Anne Bergmann, 2016. "The Link between Corporate Environmental and Corporate Financial Performance—Viewpoints from Practice and Research," Sustainability, MDPI, vol. 8(12), pages 1-15, November.

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