Home›Insurance›Reinsurance›Rethinking “secondary-peril” labels as climate risk be…

Rethinking “secondary-peril” labels as climate risk becomes multi-hazard

Insurance Journal says warming, expanding exposure, and peril interconnections are pushing insurers and reinsurers to move from peril-by-peril views toward integrated multi-peril catastrophe modeling.

Reported · Written up by our desk · Reinsurance

As climate events intensify, Insurance Journal argues the industry may need to rethink the way it labels “secondary perils” like convective storms, wildfires, floods, and hail. The outlet says these risks can no longer be easily treated as minor compared with hurricanes or earthquakes, because they are taking a larger share of insured losses in recent years.

The piece says the line between “primary” and “secondary” perils is blurring as severities from severe convective storms and flooding in some geographies can rival or surpass those of hurricanes, and wildfires can burn across multiple seasons. It adds that this leaves insurers with portfolios that are increasingly multi-hazard even when risk taxonomy has not fully caught up.

Insurance Journal attributes the shift to three themes: climate variability, growing exposure in fire- and flood-prone regions, and the way one event can trigger multiple perils. It notes, for example, that heavy rainfall can lead to flooding and landslides, creating interrelated loss patterns.

The article also points to changes in modeling and governance, saying firms are updating catastrophe models to reflect a broader risk spectrum. It says insurers and reinsurers are increasingly using ensemble-style, multi-model outputs, while placing more emphasis on model risk management and transparent communication of uncertainty to boards and regulators.

More like this

Sources