What are the main risks linked to climate change?

Between January and August 2022, large -scale climatic events generated 1.4 million claims in France, for which insurers had to pay compensation estimated at 5.2 billion euros. A worrying situation, especially since natural disasters are led to multiply in the coming years.

To better understand the phenomenon, we will base ourselves on data from two reference studies:

The drought

Drought is the consequence of a withdrawal effect, then swelling of the basements, in a context of high temperatures and insufficient precipitation. It can cause significant damage to constructions (mainly individual houses), especially if the foundations and the structure are not rigid enough.

By 2050, a 60 % increase in the loss is expected, resulting in a multiplication of damage compensated by insurers. Over the 2020-2050 period, the cumulative cost linked to this climate risk should reach 43 billion euros, three times more than over the 1989-2019 period.

The share of climate change in this development is substantial, with an additional damage estimated to 17 billion euros.

Floods

There are two main categories of floods:

  • Plaine floods: They are caused by recurring rains over a long period, sometimes amplified by the melting of snow. These are “slow” floods that are formed in a few days and which last relatively long.
  • Torrential floods: They are the consequence of intense and short -lived rainy episodes. They are characterized by a very rapid rise in waters.

In the coming years, floods will be more frequent in the majority of metropolitan departments. In question: an evolution of the precipitation diet, which will be higher on average in the north of the country, but also more intense and rarer in the southeast quarter.

According to projections, the increase in average annual claims by 2050 should reach:

  • +110 % for plain floods
  • +130 % for torrential floods

In total, the cost accumulated over the period 2020-2050 would amount to 50 billion eurosor a 81 % increase compared to the previous period. Note, however, that climate change would have a more limited impact, since it would represent “only” 3.1 billion euros in additional damage.

Marine submersion

Marine submersion designates the temporary flood of a coastal area by the sea, accompanied by extreme weather conditions.

By integrating marine submersion at the risk of flooding, the total cumulative cost for insurers would reach 54 billion euros On 2020-2050, an increase of 87 % compared to the past period.

Hail

Halm is a complex meteorological phenomenon to observe and trace. So much so that the first research works being interested in the impact of global warming on this hazard are still relatively recent.

Despite everything, the data available make it possible to provide a significant increase in the Gêligène thunderstorms in France, of the order of 40 % by 2050. In the northern two -thirds of the country, the number of hailles should increase (+1 to +4 per year).

However, the multiplication of these climatic events would result in a Increase in the loss of 20 % For automotive branches and property damage (DAB).

Storms

On a more positive note, the frequency and intensity of storms should not increase by 2050. Thus, no significant increase in the loss is to be expected in the years to come.

Insurers: how to deal with climate change?

Overall, global warming should contribute to a Increase in the loss of around 60 % in the years to come. To this must be added the inflationary trend that affects the costs of materials and repairs: windshield replacement following a hail storm, roofing repair after a storm, etc.

The impact of climate risks on insurance prices will therefore be significant. While the average cost of claims increases, insurers will have to adapt their prices and make provisions to tackle the future more serenely. The creation of new guarantees and coverage, in particular for home insurance, is also a track to explore.

However, to be up to the challenges, insurance companies will have to go further than traditional levers such as pricing, monitoring and selection of climatic risks. Indeed, the Risk prevention is brought to play an increasingly important role.

As Arnaud Chneiweiss and José Bardaji note in a study by the Foundation for Political Innovation, insurance companies must contribute to the development of a “natural risk culture” throughout the company: individuals, farmers, companies, local authorities …

More than just an insurer-payer, the insurer of tomorrow will have to implement a real strategy for piloting and management of local natural risks. Committed and proactive, he will implement concrete actions to reduce his sinistrality, for example:

  • Encourage individuals living in flooding areas to equip their houses with waterproof doors or fights.
  • Develop clay treatment solutions or soil rehydration in order to reduce the risk of drought.