How extreme weather will affect the insurance and energy sectors
Some energy traders benefited as the high wind speeds led to record-breaking wind power production and significant energy price drops.
- Some energy traders benefited as the high wind speeds led to record-breaking wind power production and significant energy price drops.
- Extreme weather events cause extensive economic damages, with more than US$100 billion (£80 billion) of this being covered by insurance in 2023.
- An event that benefits the energy sector can be detrimental to the insurance industry, and vice versa.
- Climate change is likely to intensify these extreme weather events, potentially increasing or altering their impact on the energy and insurance sectors.
- Focusing on the insurance sector, extreme weather events are of interest due to the potential to cause destruction and damages that need to be financially covered.
- Insurance companies evaluating risks must account for a combination of the most extreme weather systems, and those affecting built-up, developed areas.
- Many types of extreme weather, from dust storms to heavy snowfall, can have adverse impacts on energy infrastructure, generation and demand.