By Pinto Suri, Principal, Credit Analyst, U.S. Investment Grade Research Team
When considering climate change and the increasing frequency and severity of natural disasters, a common perception might conclude that the property & casualty insurance industry faces significant credit risk from these highly unpredictable events. The industry’s exposure is significant—nearly 90% of its $60 billion in insured losses in 2019 were due to natural disasters.
However, we conclude the contrary. We see the P&C industry as essential to managing the growing risks to property and livelihoods from the effects of climate change. Yet, the uninsured portion of economic losses from natural disasters continues to rise unabatedly.
While the widening “protection gap” presents P&C insurers with challenges, it also highlights the industry’s expanding growth opportunities, which continue to support our overweight positioning across the global P&C insurance industry.