Climate change and insurance

Abstract

The potential for global climate change has become a major problem for the current generation. The principle of sustainability aims to assure better living and environmental conditions for future generations, and, because of this, climate change has become a major international focus. In this paper, we will analyse two aspects of climate change: changes in the average temperature and changes in the day-to-day variability of temperature. As a result of our study we find that, in Paris, the average temperature has increased by approximately 0.5 degrees Celsius over roughly the last century, while the variance of the daily temperature has slightly decreased. We then tie these results into a broader overview of the larger phenomenon of global climate change. All three major sectors of economic activity: agriculture, industry and services are influenced by climate change but in this paper, we will focus on the relationship between climate change and the insurance industry. This is especially relevant, as the insurance industry is focus risk management methods used by the manager to face phenomena such as climate change.