Reserving actuaries need to consider the financial implications of climate change

I am delighted to announce the publication of the Institute and Faculty of Actuaries Climate Change Reserving Working Party Paper.


We will be presenting at GIRO 2023 in Edinburgh on Thursday, 2 November 2023.

Reserving actuaries need to engage with how climate change is affecting general insurance company reserves and assessing where the greatest areas of change will arise.

The paper addresses three topics: litigation, uncertainty wordings and qualitative tools:

The litigation section sets out an introduction to the landscape of climate change litigation, providing background to a number of landmark cases that are still going through the courts. These cases are testing legal arguments relating to climate change and are expected to shape climate litigation over the years ahead.

The uncertainty wordings section considers some of the challenges that reserving actuaries face when describing climate change.  With the intention of stimulating a necessary industry-wide discussion, some suggestions are made on how actuarial large loss reserve uncertainty wordings might evolve.

The qualitative tools section provides guidance and a framework that reserving actuaries can adapt and adopt to help them to appraise portfolios.

We believe that this paper will be of interest beyond the non-life actuarial reserving community and across the insurance industry.

Alex Marcuson, 30 October 2023