Insurance Business ReviewJULY 20258IN MY OPINIONTHE NECESSARY BUSINESS TRANSFORMATION OF COMPANIES TO FACE WITH THE UNINSURABILITY OF NAT' CAT'By Arnaud Bergauzy, Group Insurance Director, Groupe VIVESCIA Recognizing Arnaud Bergauzy's expertise in corporate risk management and insurance, this exclusive insight explores the growing uninsurability of natural catastrophes, the financial impact on businesses, and the urgent need for companies to rethink risk mitigation strategies in the face of climate change.Rethinking Risk Management in a Changing ClimateIf some still remain skeptical about the impact of Climate Change on our planet, no one can deny the dramatic consequences of the multiplication of natural events, whether in human losses but also in financial costs.The latest, Cyclone Chido in Mayotte in December, caused, according to the Caisse Centrale de Réassurance (CCR), damage (covered by insurance) estimated between 750 and 880 million dollars. But this amount is far from other natural disasters occurring this year 2024 and in particular in the United States, which are the most affected this year, with a total cost of $120 billion just for the winter storms of January and the hurricane. Milton in October according to the NGO Christian Aid.The Asian continent also paid a heavy price in 2024, in particular because of the floods in China last June and July as well as Typhoon Yagi in September for a total cost of $28.2 billion. Europe, for its part, was less impacted in 2024 even if everyone remembers the dramatic floods in Valencia in Spain last October, the cost of which alone is estimated at $4.2 billion.Thus, if we take the 10 largest natural disasters occurring in 2024, we reach the amount of $229 billion, or almost 3 times more than in 2018.Faced with an increase in the frequency but also the intensity of natural disasters which significantly impact their loss ratio, insurers have drastically revised in recent years the conditions for renewing their clients' PDBI insurance contracts. And this hard market phenomenon observed in 2019 is not about to stop, quite the contrary, if we refer to the scenarios, even the most optimistic, of the IPCC.This permanent tension imposed by insurers is already having dramatic consequences on all of our lives. Thus, the uninsurability of certain risks, certain sites or certain activities is now a terrifying reality. Take the example of Australia. Hit hard by a series of natural disasters (mega-droughts, record floods, monster fires, etc.) in recent years, this country is facing an
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