Climate Change-Induced Agriculture Failures Could Cost Global Insurance Market Trillions

Lloyd’s of London, a prominent global insurance market, has raised concerns about the potential economic consequences of climate change-induced abnormal weather. According to the company, if such weather events lead to agricultural crop failures and food and drink shortages, the insurance market could face significant losses, estimated to be around a trillion dollars. This assessment highlights the growing vulnerability of the insurance industry to systemic threats in an increasingly complex global economy.

A recent joint study conducted by Lloyd’s and the Cambridge Risk Research Center further emphasizes the potential risks associated with extreme weather events. While the study acknowledges that its findings are based on hypothetical scenarios, it suggests that the likelihood of such events occurring is high. In fact, it estimates that if extreme weather events were to take place, the global economic loss could reach a staggering $5 trillion, with a minimum estimate of $711 billion.

To arrive at this estimate, the study categorizes the severity of potential losses into three levels and calculates an average. The projected loss over the next five years is estimated to be $5 trillion, with a range that spans from $3 trillion to $17.6 trillion.

Trevor Mayard, an expert from the Cambridge Center for Risk Research, underscores the need for businesses and policymakers to consider the potential impact of these scenarios. As the global economy becomes increasingly susceptible to systemic threats, understanding and addressing the risks associated with climate change-induced extreme weather events is imperative.

In conclusion, Lloyd’s of London’s assessment serves as a critical wake-up call urging stakeholders to recognize and prepare for the potentially far-reaching economic consequences of climate change. By taking these risks into account, businesses and policymakers can help mitigate the impact and safeguard the global economy.

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On October 11, the global insurance market Lloyd’s of London (Lloyds Insurance Association) announced that if abnormal weather caused by climate change increases agricultural crop failures and food and drink shortages, the global insurance market will suffer and it is estimated that there could be an economic loss of a trillion dollars. The picture shows the Lloyd’s logo. Photograph taken in April 2019 in London (2023 Reuters/Hannah McKay)

LONDON (Reuters) – Global insurance market Lloyd’s of London said on the 11th that if abnormal weather caused by climate change causes crop failures and food and drink shortages to increase, future forecasts will increase over the next five years. that there could be a global economic loss of $5 trillion.

A joint study published by Lloyd’s and the Cambridge Risk Research Center emphasizes that the “general risk scenario” which assumes the impact of extreme weather events on the global economy is a hypothesis, but gives $5 trillion such as the likelihood of extreme weather events occurring. , the global economic loss would be $711 billion.

In the scenario, the severity of the loss is divided into three levels and the average is calculated. The result was a loss of $5 trillion over the next five years, with a range of $3 trillion to $17.6 trillion.

“The global economy is becoming more complex and increasingly vulnerable to systemic threats,” said Trevor Mayard of the Cambridge Center for Risk Research. The study “will help businesses and policy makers consider the potential impact of these scenarios,” he said.

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