Anthemis Insurtech Forum: Climate Change and It’s Impact on the Insurance Industry
By: Ruth Foxe Blader
Tags: Insurtech, Venture Capital, Covid 19, Insurance, Climate Change

“Change in the last 50–100 years is unprecedented in the last 10,000.” — Bianca Perren, Paleoclimatologist at the British Antarctic Survey

“Three of the lowest snowfall years have happened in the last 10 years. Also, three of the highest snowfall years have happened in the last 10 years.” — Ed Byrns, founder of the Demex Group

“I’ve seen a 10x reduction in the cost of solar panels in 10 years. There are very few things in this world that really have that sort of cost trajectory…” — Richard Matsui, founder of kHWAnalytics

It was my great pleasure to speak to these three recently on Anthemis’ Insurtech Forum, Climate Change: The Impact on Insurtech.

Bianca talked about “big changes, threshold responses and tipping points,” most of which are basically unpredictable…and which make modelling climate change difficult over the long term.

Ed confirmed that we see climate events — catastrophic and non-catastrophic — increasing in the data series. He described how his new company, The Demex Group, seeks to help companies manage their costs through increasingly volatile seasons, the “shock absorber” to climate change. By “dialing the horizon way back in,” Demex is able to create models around annual snowfall, rainfall and other non-catastrophic climate events, and sell companies insurance and hedging products to protect their balance sheets from climate extremes. Because climate exposure is so specific to individual businesses, The Demex Group integrates client data to calibrate protection products to individual business volatility and localized risks.

On the other side of the climate coin, Richard is thinking about reversing the impact of our excessive carbon footprint by making renewables more investible. As he told us during the Forum, “How we generate electrons and how we move atoms: that’s half of the problem right there.” To wit, having built actuarial models from data harvested from their proprietary database, the largest database on US solar farm performance, kWh Analytics has partnered with insurance companies to ensure the revenue coming from solar farms.

In addition to covering the Greenland Ice Sheet, geo-engineering, “Chief Welder” and the weather specificities of de-icing, we also discussed why Chobani and Dollar Shave Club were startups, rather than projects incubated by large institutions (which “are not product companies, but marketing companies”). If, as Richard said, new product development is a muscle insurance that companies “have allowed to atrophy,” Bianca reassured us that the number one strategy for all of us in combating climate change is adaptability. The 8 percent reduction in greenhouse gases we have experienced during the COVID-19 crisis, while not achieved in a sustainable way, is proof that we, as humans and organizations, are capable of tremendous adaptation.

Bianca told us that we are in a “no-analog situation,” where “there’s still a lot we don’t know.” But, despite the gravity of the topic, talking to Bianca about her work in the Arctic and to Ed and Richard about their work at Demex and kWh Analytics gave me a lot of hope.

To hear this webinar and more, please visit Anthemis Insights.