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Cambridge Institute for Sustainability Leadership (CISL)

28 March 2022 – ClimateWise members unpack the implications of scenario analysis for underwriting with UK flood example.

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The ClimateWise whitepaper considers the options, implications and communication of scenario analysis for underwriting non-life insurance. It raises awareness of different natural catastrophe modelling approaches and highlights the valuable insights that can be generated across the insurance business. This further shows the unique opportunity for business and society to engage with such analysis and better understand the benefit of managing physical risks in a changing climate.  As an example, we present the outputs of UK flooding from two different multi-flood-type quantification approaches from Ambiental and JBA Risk Management.

Given the data available, modelling expertise and regulatory momentum for scenario analysis in the UK, this white paper focuses on flooding to demonstrate impacts of climate change on one peril. The recommendations are then drawn more widely to reflect the ClimateWise membership, the insurance industry and its global scope and remit. The paper aims to explain how we use climate-conditioned catastrophe models to undertake scenario analysis. With this, we could understand how climate risk propagates through different areas of the insurance underwriting process and the relevant considerations and implications for insurance firms, the insurance industry and society. Following this research we make recommendations on how to progress scenario analysis in underwriting for insurance firms, the insurance industry and wider society.

ClimateWise members are committed to understanding and managing the physical impacts of climate change within their own business as well as promoting wider financial sector, policy and societal resilience to climate change.

Citing this report

University of Cambridge Institute for Sustainability Leadership (CISL). (2022). The Coming Deluge: Scenario analysis for underwriting in a changing climate. Cambridge, UK: University of Cambridge Institute for Sustainability Leadership.   

Find out more about ClimateWise here.


Published: March 2022

Authors and acknowledgements

The researchers and authors of the report are members of ClimateWise, particularly Aon, ArgoGlobal, Aviva, AXA XL, Chubb, FloodRe, Lloyd’s, Santam, Tokio Marine HCC and Willis Towers Watson, together with CISL’s Dr Bronwyn Claire, Rachel Austin and Dr Nina Seega, and Stefan Wolf Stärtzel. We particularly thank and acknowledge the support of Ambiental Risk Analytics, a company of Royal HaskoningDHV, and JBA Risk Management Ltd in providing the scenario details. 


The opinions expressed here are those of the authors and do not represent an official position of CISL, the University of Cambridge, or any of its individual business partners or clients.