Reinsurance
Reinsurance activities that support the insurability of climate-related risks and promote systemic climate adaptation across insurance markets.
Substantial Contribution to Climate Change Adaptation
The reinsurance activity must provide coverage for climate-related natural catastrophe risks (flood, storm, wildfire, drought, hail, sea level rise) and contribute to maintaining the insurability of these risks as climate change increases their frequency and severity. The reinsurer must demonstrate its contribution to adaptation through the following criteria.
The reinsurer must use forward-looking catastrophe models that incorporate climate change projections consistent with IPCC AR6 scenarios, going beyond historical loss data to account for non-stationary risk trends. Model assumptions regarding climate-driven changes in hazard frequency and intensity must be transparent and regularly updated as new climate science becomes available.
The reinsurer must actively support the development of insurance market capacity for climate perils in underserved regions or for emerging climate risks. This includes providing technical assistance to primary insurers for climate risk assessment, developing innovative risk transfer products (parametric insurance, resilience bonds), or participating in public-private partnerships for climate risk sharing.
The reinsurer must report annually on its climate risk exposure, including gross and net exposures to climate-related perils, trends in climate-driven losses, and its role in supporting adaptation through product innovation and risk reduction advisory services provided to cedants.