Weather Perils and Rising Insurance Premiums: Where to Next?
Snapshot
- Economic and structural drivers are as critical as increased weather peril risk in influencing premium rises.
- Risk buyers will need to prove enhanced resilience to achieve cost-effective risk transfer.
- Data plays a critical role for insurers seeking to accurately price risk.
In recent years, large losses related to weather perils have had a significant impact on premium pricing. However, while the changing nature of weather perils undeniably impact insurance premiums, it is only part of the story. Understanding where to next requires a deeper dive into drivers influencing the market and insights into which trends are here to stay.
The changing nature of weather perils is often highlighted as a primary factor in rising insurance premiums across the Pacific region. However, other more localised factors, such as the impact of rising inflation and increases in house prices, also play critical roles. In addition to these evolving economic factors, there are other drivers influencing premium increases including a structural shift to risk-based pricing, alongside the impact of the global reinsurance market.
Given these dynamics, where are premiums headed?
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