The MSCI Institute has released a new report highlighting that insurers in the Asia-Pacific (APAC) region are increasingly concerned about the systemic financial risks posed by climate-driven physical hazards. The survey, which included 50 of the world’s largest property and casualty insurers and reinsurers, found that 100% of APAC insurers express high concern about infrastructure insurability in vulnerable regions, surpassing the global average by 4 percentage points.
The report underscores that whilst individual insurers rate their own preparedness above the industry’s, there is a significant gap in operational integration of these risks. In APAC, 64% of insurers express high concern about systemic risks, yet 63% are still in the early stages of integrating these risks into their management frameworks. This suggests a widespread awareness-integration gap that could have serious implications for infrastructure finance and real asset markets.
Globally, 91% of insurers see opportunities in climate risk and resilience advisory services, although this figure drops to 75% in APAC. Additionally, 58% of insurers, both globally and in APAC, identify parametric products as a key opportunity. However, only 17% of APAC insurers view insuring nature-based resilience as a significant opportunity, slightly higher than the global average of 11%.
The report also notes that physical risk is increasingly becoming a focus for regulatory bodies, with growing requirements for insurers to assess hazard-related scenarios and climate risks in their risk management and disclosure practices. Despite these challenges, the report suggests that the insurance industry is at a critical juncture, with significant opportunities for innovation and adaptation in response to the escalating physical risks.
