Growing risks associated with climate change is fast emerging as the biggest challenge for the insurance industry.

Right from loss of life due to cyclones to covering the damages of private property induced by flash floods and other natural calamities, insurance companies are gearing up to manage risks associated with climate change.

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Climate change will significantly impact the insurance industry with higher severity of catastrophic losses, inadequacy of property coverages, and higher business interruption losses, said MR Kumar, former Chairman, LIC of India.

Speaking at the 7th Birla Institute of Management Technology Insurance Colloquium, he said that India is one of the most vulnerable countries to climate-induced flooding and heat stress.

“The city of Mumbai could suffer economic damages of $49 to 50 billion by 2050 due to sea level rise. Insurers must integrate both physical and transition risks, and find ways to manage them effectively. Policymakers may need to require insurers to extend coverage where economically unfeasible,” he added.

Organised by the Birla Institute of Management Technology, one of the leading B-schools, the colloquium was themed “Expanding the Sustainable Value Chain: Climate Change’s Impact on Property & Casualty, Health and Life Insurance.” There were intriguing and insightful conversations about the important relationship between climate change, insurance, and sustainability.

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The event also witnessed the release of the “India Insurance Report,” which offered insightful information about the current situation of the insurance market in India.

Prof Bejon Kumar Misra, International Consumer Policy Expert and member of the Executive Committee – General Insurance Council said the industry must prioritise sustainability, innovation, and the well-being of every individual in consultation with all stakeholders and create a future where no one is left behind.

Prof Abhijit K Chattoraj, a Chartered Insurer and Chairperson of PGDM-IBM at BIMTECH emphasized the importance of a net zero transition in underwriting and mitigate losses caused by climate risks.

Property and casualty underwriters must strategically work to seize the growth opportunities resulting from this transition and underwriters must adjust their portfolio to minimize their carbon footprint, he added.