Page 18 - Turkinsurance Digital Magazine

18 cover story

large losses, requiring a certain amount of capital to decouple
the difference between predictable damage and these excessive
damage amounts. This, in turn, is quite a negative for the insur-
ance sector.

Managing this process correctly is very important for the future
of both the sector and our world. Raising public awareness of
climate changes, producing products for this area and acting in
accordance with the goals of decelerating/stopping the negativity
are among the primary goals of the sector.

Disasters on the rise in Turkey

We are anxiously following news of the fire from many differ-
ent parts of the world. We are witnessing the loss of lives with
storms and floods that affect not only Turkey but also other
countries. We see that as climate change threatens the ecosys-
tem, it also endangers everything connected to this system. Risks
and hazards associated with environmental degradation affect
some sectors.

Insurance is one of the sectors directly exposed to climate
change. The increased risks associated with climate change are
making it difficult for companies to assess the risk of natural
disasters. Because until now, these areas were not considered a
risk, while material damage due to such climate crises was also
very low. But this has also changed with climate change. Some
assets are becoming uninsurable as uninsured losses rise. For ex-
ample, it becomes almost impossible to protect homes and other
properties on the route of the fire, to withstand floods, storms,
It concerns many sectors
hail, dam overflows, rising sea levels.
Climate change, climate change mitigation and climate change
adaptation policies directly or indirectly affect various sectors. Now with more frequent extreme weather events, insurance costs
Climate change affects sectors such as agriculture, forestry, fish- are rising. That means a higher premium. One wonders how to
eries, health, tourism, real estate, as well as energy related sec- calculate the likelihood of being affected by the disaster. It is
tors such as cement, aviation, metal/mining etc. Of course, the emphasized that the capacity of insurance companies to pay
insurance sector is also one of the sectors under threat. For the every compensation may be weakened. It seems possible that the
insurance sector, the most important effect of climate change reluctance to insure will increase in countries that will be more
is that, due to the increase in the number and severity of disas- affected by climate change.
ters, damage covered by insurance can reach very high amounts
and leave insurance and reinsurance companies in a financial- The industry has to innovate to meet the needs of individuals
ly difficult position. The sector's key position in compensating and businesses in mitigating the effects of climate change. In
for financial losses faced by insured households, farmers, energy this way, although they cannot provide full protection for their
providers, etc. increases this possibility. customers, it is seen that they can close some gaps.
$2.4 trillion economic loss by 2030
Although climate change has a direct impact on damages, it also
has indirect effects that will threaten the profitability and busi- The latest ILO report warns us of climate risks. According to
ness model of the insurance sector. Insurance coverage for ex- the report, climate change is expected to cause $ 2.4 trillion in
pected damage amounts is insufficient in the face of unexpected