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Moody's urges insurers to use near-term climate risk measures in credit
Moody's says next year's budgets and the next one to five years' resilience need quantified exposures over about 24 months, not multi-decade totals.
Moody's is pushing insurers, brokers, and other financial decision-makers to shift from headline multi-decade climate loss figures toward more actionable, near-term credit measures, arguing that trillions aggregated through 2050 are too distant to guide decisions that matter now.
In a special report titled Understanding Physical Risk: A Framework for Financial and Institutional Decision-Making, Moody's starts from its own late 2025 estimate of $41.4 trillion in global economic losses by 2050, but says such distant totals are not useful for setting near-term budgets, defining credit exposures, or planning operational resilience over the next one to five years.
Instead, the organization argues that a quantified physical risk exposure over the next 24 months is the right scale for underwriting decisions, reinsurance treaty structures, and credit assessments, and that the same discipline should be applied across banks, asset managers, corporates modeling business interruption, and public sector capital planning.
Moody's also points to existing stakes without relying on 2050 projections, citing Munich Re's estimate that total global natural catastrophe economic losses were around $320 billion in 2024, with only about $140 billion insured, leaving roughly 56% uninsured and already consequential for governments, businesses, and their lenders.