Scenario 3: Climate resilience emerges selectively across economies
In the third scenario, a more targeted climate-resilience approach develops, with higher-income nations investing heavily in corporate sustainability and disaster response policies.
For example, banks begin incorporating climate risk into mortgage rates and insurers lower premiums for properties adapted to withstand climate shocks. Meanwhile, developing nations focus on immediate disaster relief to protect lives.
Where insurers withdraw from high-risk zones, governments introduce stricter safety regulations and climate-resilient building codes. Insurers, in turn, leverage predictive analytics and historical data to better gauge risks.
The scenario highlights the industry’s potential to actively use data to address climate challenges.
Scenario 4: Insufficient innovation and cooperation strain the industry
The fourth scenario foresees a breakdown in collaboration between governments and businesses, leading to stunted technological growth and inadequate climate action.
Without sufficient regulation and support, AI’s full potential remains unrealised, leaving the insurance sector ill-prepared for escalating climate-related disasters.
As the insurance industry struggles, the protection gap reaches unprecedented levels, especially in emerging markets, which lack resources for broad coverage.
The breakdown could spur localised risk-sharing groups in communities, a grassroots response to increasingly severe climate events.