Physical climate risks associated with extreme weather events are increasing due to climate change.

The world’s population is growing, and that growth is essentially centred in cities. Though they bring huge economic and social benefits, cities are also exposed to an exponential rise in risks: climate change threatens to bring more extreme weather events; human density accelerates the speed at which infectious diseases spread; and social inequality can exacerbate the risks of social unrest and crime. How will cities cope with this evolving risk landscape and how can insurers contribute to managing future urban risks?

Insurance relationships are fundamentally built on trust between insurers and their customers. Customers trust that insurers will act in ways that ensure their solvency and that they will promptly pay claims when they are due; insurers in turn trust that policyholders will make sure to minimise their risk after signing a policy and that any claims they make will be genuine. Certain shifts such as digitalisation, however, may pose a threat to customer trust as concerns around data privacy, misuse of information and bias or discrimination arise.

The scale and pace of digitalisation is fundamentally changing the risk profile of businesses, mainly linked to the shift towards intangible assets for value creation among digital firms. Many of these intangible assets remain uninsured, leaving digital entrepreneurs and start-ups vulnerable to emerging risks and liabilities. This presents both challenges and opportunities for the insurance industry.