Impact of Climate Change on Insurance Claims and Risk Assessment
Major weather events such as Cyclone Amphan, the floods in Assam and Kerala, and prolonged heatwaves across North India have resulted in substantial losses, particularly affecting the crop and motor insurance sectors. These incidents highlight the growing impact of climate change on the insurance industry’s risk assessment and claims processing.
The increasing frequency and severity of natural disasters are forcing insurers to reassess their risk models and adjust their strategies accordingly. The crop insurance segment has been significantly affected due to the rising number of extreme weather events that damage crops, leading to a surge in claims. Similarly, the motor insurance sector is also experiencing a higher number of claims due to flood-related damages.
Insurance companies are now focusing on refining their risk assessment processes to account for the changing climate patterns. This includes incorporating climate data into their models to better predict and prepare for potential losses. The industry is also exploring innovative solutions, such as parametric insurance products, to enhance their response to climate-related disasters.
As climate change continues to influence weather patterns, the insurance industry must adapt to these changes to remain resilient. By leveraging advanced data analytics and climate modeling, insurers can improve their risk assessment capabilities and develop more effective strategies to manage climate-related risks.
