What is insurtech and why does it matter for climate risks?

Insurtech refers to technology-driven approaches to insurance, including AI, satellite imagery, and advanced data analytics. For climate risks, these technologies help companies accurately measure and price challenging environmental risks like floods, hurricanes, and wildfires that traditional insurers might avoid. This matters because as climate change creates more extreme weather events, insurtech solutions become essential for protecting homes, businesses, and communities.

How do climate-risk underwriters make money?

Climate-risk underwriters generate revenue by charging premiums for specialized insurance policies that cover environmental risks. They leverage sophisticated data and AI to price these risks more accurately than traditional insurers. Some also earn fees by providing risk modeling services, data analytics, or software platforms to other insurance companies. Their competitive edge comes from being able to profitably insure properties and businesses in high-risk areas where other insurers won't go.

What are reinsurance companies and why are they in this group?

Reinsurance companies are essentially "insurance for insurance companies." They allow primary insurers to transfer portions of their risk to protect against major losses from catastrophic events like hurricanes or wildfires. Reinsurers in this group specialize in climate-related risks and use advanced technology to analyze and price these complex exposures. As climate risks increase, reinsurers play a crucial role in ensuring the insurance market remains stable and capable of covering large-scale disasters.

What are "property catastrophe" or "nat cat" risks in insurance?

Property catastrophe (often called "nat cat") risks refer to potential losses from major natural disasters like hurricanes, floods, wildfires, and earthquakes. Unlike everyday insurance claims, these events can cause widespread damage affecting thousands of policyholders simultaneously. The companies in this group specialize in understanding, measuring, and pricing these large-scale risks using advanced data analytics, satellite imagery, and computer modeling. As climate change increases the frequency and severity of these events, specialized expertise in catastrophe risk becomes increasingly valuable.

How might climate regulations affect these companies?

Climate regulations are likely to benefit these companies in several ways. As governments require businesses to disclose their climate risks, demand increases for specialized insurance products and risk assessment tools. Additionally, stricter building codes and zoning laws in vulnerable areas create opportunities for insurers with sophisticated risk pricing capabilities. These regulatory trends create a growing market for the data-driven solutions offered by climate-risk underwriters, potentially driving long-term growth in this sector.

15 handpicked stocks

Climate-Risk Underwriters

These innovative companies are turning climate uncertainty into a measurable market opportunity. Our analysts have carefully selected insurtech pioneers who use advanced data and AI to manage environmental risks that traditional insurers avoid.

Han Tan | Market Analyst

Updated 2 days ago | Published at June 17