Industry still underestimating climate risk: Descartes CEO Touffut

The industry is being overly optimistic about the looming scale of losses from climate change, Tanguy Touffut, chief executive officer and co-founder of Descartes Underwriting, warned. “The re/insurance industry is still underestimating the consequences of climate change,” he told Monte Carlo Today.

He said that even though the market is growing, it’s nowhere near fast enough to keep up with the increasing pace of climate-driven damages.

“The uninsured losses are growing faster than the insured losses,” he said. “Even with market growth, the protection gap is widening.” The industry, he stressed, needs to move quickly to close this gap.

One of the most troubling trends, according to Touffut, is the rise of secondary perils such as severe storms, floods, and tornadoes. “Secondary perils are becoming major issues for the industry,” he said. The industry’s models, he insists, must “catch up” to deal with these changes. 

“Parametric insurance is becoming a vital solution for handling these growing risks.”

Parametric insurance is becoming a vital solution for handling these growing risks. Unlike traditional policies, parametric insurance offers speed, transparency, and fewer exclusions—exactly what clients are demanding in an increasingly volatile climate, Touffut said.

“Clients want swift payment, transparency, and to reduce the number of exclusions in their contracts,” he said.

He sees parametric insurance not just as a complement but as a compelling alternative to traditional insurance. It’s not just for natural catastrophes—parametric solutions are gaining ground in areas such as cyber risk, offering a flexible and innovative approach to emerging threats, he concluded.

For more news from the Rendez-Vous de Septembre (RVS) click here.

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