Assessing U.S. insurance firms' climate change impact and response

Aparna Gupta (), Abena Owusu () and Jue Wang ()
Additional contact information
Aparna Gupta: Rensselaer Polytechnic Institute
Abena Owusu: Montclair State University
Jue Wang: University of Massachusetts

The Geneva Papers on Risk and Insurance - Issues and Practice, 2024, vol. 49, issue 3, No 7, 604 pages

Abstract: Abstract Climate change poses a serious risk for insurance firms, threatening their sustainability from numerous channels of impact. Assessing this impact, however, is not straightforward. We assess and distinguish between insurance firms by impact and response to climate change and relate the firms’ financial characteristics to climate risk exposure. A text mining approach using climate change sub-dictionaries on risk exposure, impact, and response, and a nested feature extraction method is developed to define and classify insurance firms’ adaptation levels to climate change. These features reveal that casualty insurance firms are most susceptible to acute climate risk, while life insurance firms are more prone to chronic climate risk. Insurance firms with the highest exposure to climate change present a high level of adaptation to pecuniary impact of the risk. Nevertheless, many firms with exposure remain inadequately prepared for climate change and firms with high exposure show relatively higher financial weakness.

Keywords: Climate change; Insurance firms; Textual analysis; CART analysis (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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DOI: 10.1057/s41288-023-00297-7

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