Valuable expert insight and expertise

Valuable expert insight and expertise

‘Concerns raised on the ability of firms to analyse and interpret scientific literature themselves’


This week the PRA outlined their response to feedback received from the insurance industry on the framework for assessing financial impacts of physical climate change report: ‘A framework for assessing financial impacts of physical climate change: A practitioner’s aide for the general insurance sector.’

With climate change set to be one of the greatest risks of all, insurers stand to be impacted in significant and far-reaching ways. One of the key learnings highlighted from the insurance industry feedback was around the importance of expert judgement and ‘concerns raised on the ability of firms to analyse and interpret scientific literature themselves’.

As an industry built on managing risk it should come as no surprise the importance of seeking expert advice and judgement when assessing impacts from physical climate change perils. Being prepared can improve any businesses ability to recover from disasters linked to climate change that can be extremely damaging to property and livelihoods. Firms (including insurers and banks) need to start encapsulating physical climate risks using more sophisticated risk underwriting processes, with space for expert judgment. This starts with the selection and implementation of the right climate-risk data to measure portfolio exposure, and to undertake preliminary risk screening at the start of the customer journey or origination. But it should not end there, firms need to combine this quality of data with expert judgement to provide the full picture and true appreciation of the levels of risk to specific properties and land. This degree of due diligence can reveal wider business and customer engagement opportunities that may otherwise be missed. 

Reducing ‘at risk’ properties by some 22%…

Recent research with our partners at CLS Data indicates that adopting a property-level assessment of flood risk can reduce the number of ‘at risk’ properties by some 22%, compared with a less sophisticated postcode-level assessment. Understanding environmental risk at a more granular level and having access to experts who can interpret perils on a property-specific basis can open-up customer engagement opportunities, provide a wider viable customer base and can allow for more sophisticated risk appetite agenda. As the regulators mandate more diligent assessment of physical climate risks it will become ever-more important to allow room for expert judgment to inform risk underwriting and avoid blighting property and businesses. The PRA also highlighted that there is a need for guidance to:

  • help assess the current model calibrations and whether these accurately represent climate change data
  • the value in having a more streamlined expert judgement method for the expert to use when assessing impacts from physical climate change
  • recognition that impacts from physical climate change include opportunities as well as risks. 

Our team at D-Risk are well placed to provide that much needed support with expert insight to research data and can deliver first-hand knowledge of the impact of climate related events on property and business opportunities. We add value to decision making processes by using a synergy of enriched data risk intelligence and expert opinion. This robust combination means we can provide clients with the right tools to forward plan and reduce the uncertainty of climate-related financial and development threats.

Talk to us at D-Risk today...