AIWorldNewz.com

Revolutionizing Risk Models: Climate-Driven Market Demands Innovation

Source: Why legacy risk models are falling short in a climate-driven market (2025-11-28)

In today’s rapidly changing climate landscape, traditional risk models are no longer sufficient, prompting a critical shift in the reinsurance industry. Amy Antczak, co-founder and COO of GreenieRE, highlights that legacy models, built on decades-old data, are failing to accurately predict emerging climate risks, especially in commercial lines where climate-related exposures are increasingly unpredictable. The industry faces a stark reality: 100-year storms now occur every decade or even more frequently, yet existing models lack the necessary data to keep pace. This gap hampers accurate risk assessment and pricing, leaving insurers vulnerable to unforeseen losses. GreenieRE advocates for a transformative approach, leveraging advanced technologies like machine learning and large language models to develop forward-looking, predictive risk models. These innovations aim to enhance data quality and quantity, enabling more precise underwriting and better risk management in a climate-volatile world. Recent developments further underscore the urgency of this shift. Governments worldwide are investing billions in climate resilience infrastructure, which will influence risk profiles and insurance markets. The increasing frequency of climate disasters has led to record-breaking insurance claims, prompting insurers to reevaluate their models. Additionally, the integration of satellite data, IoT sensors, and climate modeling software is providing richer datasets, although their full potential remains underutilized. The insurance industry is also witnessing a surge in climate-related litigation, which could impact risk assessments and policy terms. Furthermore, the adoption of blockchain technology is improving transparency and data sharing among stakeholders, fostering more accurate risk evaluation. As climate change accelerates, the need for innovative, technology-driven risk models becomes critical to ensure financial stability and resilience. Industry leaders are calling for a paradigm shift, emphasizing that embracing these new tools is essential for sustainable underwriting and risk management in the climate era.

More recent coverage