Climate Linked Challenges for the Insurance Markets (Invited Presentation)

The year 2023 marked a historic milestone in the United States, as severe convective storm (SCS) activity propelled insured losses approaching $60 billion for the first time on record. This marked just the third time on record that the tally surpassed $40 billion (2011, 2020, 2023). Remarkably, only three years on record—2005 ($135 billion), 2017 ($69 billion), and 2022 ($60 billion)—have seen mainland hurricane activity result in insured losses exceeding $50 billion. This helps put into context the exceptional level of loss activity incurred from thunderstorms in 2023.

According to insights shared by Steve Bowen, the Chief Science Officer at Gallagher Re, a global reinsurance broker, the severity of SCS losses underscores the urgent need for a deeper understanding of this and other weather perils. Recognizing this gap, Gallagher Re appointed Bowen to the newly created position in late 2022, to work across the firm to integrate scientific research into business offerings and further establish private and public sector engagement.

Steve and his team are dedicated to providing practical, solutions-oriented, data-led, and objective assessments of the evolving risks posed by climate change. As the world's risk horizon becomes increasingly turbulent, the insurance marketplace is stepping up to the challenge, aiming to empower policyholders to navigate the future successfully.

The growing and broad-reaching impacts of climate change and natural hazards demand innovation and clear communication on how risks are evolving. Reinsurers, in collaboration with insurers, are actively working to understand and address the evolving landscape of risk. Moreover, they are taking a proactive role in advancing the climate change conversation by engaging various private and public sector entities to develop and deliver applicable research and thought leadership.

The 2023 SCS activity serves as a wake-up call not just for the insurance industry, but academics, emergency managers, and various local and federal governmental agencies. It not only emphasizes the pressing need for a better understanding of emerging perils but also underscores the industry's commitment to innovation and collaboration. As reinsurers and insurers join forces to comprehend and mitigate risks, the collective effort aims to build a resilient framework that will stand up to the challenges posed by an ever-changing climate.

This presentation will focus on collaborations and best practices to meet the future needs of insurers.

Steve Bowen has nearly two decades of insurance industry experience and is currently Chief Science Officer at Gallagher Re. He initially turned his love of weather into an academic background in meteorology by starting his professional career in television.

A key motivation of his day-to-day work features the emerging and evolving trends associated with increasing weather volatility, climate change, population and exposure patterns, and natural hazard-related financial losses. He strives to implement data analytics to help clearly communicate evolving hazard risks and associated loss trends to the insurance industry and beyond. An increasingly vital part of his work includes providing expertise to new strategies focused on combating the growing hazard, physical, non-physical, societal, and financial challenges posed by climate change. This includes growing focus on critical issues within the ESG space and transitioning to a net-zero carbon emission world.

Steve earned his Master of Science in Business Analytics degree from the University of Notre Dame, and his Bachelor of Science degree in Meteorology from Florida State University.