SONAR Report Examines Public Health Implications of Climate Change

The latest SONAR report from Swiss Re reveals 5 emerging risk trends and 15 emerging risk themes. With the report, Swiss Re seeks to initiate an informed dialogue about the future risk landscape that might lie ahead for insurers and reinsurers.

While the report identifies many new risks that come out of new innovations and developments, ranging from increased global vaccine hesitancy to geographically shifting markets, Swiss Re also recognizes "slow-burner" emerging risks with long-running impact potential, such as the public health implications of climate change. Swiss Re has been monitoring the emerging risks related to climate change since 1989.

Outlined below, the report covers the top five emerging risks, which include digital technology's clash with legacy hardware, potential threats from the spread of 5G mobile networks, increasingly limited fiscal and monetary flexibility by central banks, genetic testing's implications on life insurers, and the impact of climate change on the life and health sector.

Teaching an Old Dog New Tricks: New Technologies Meet Aging Infrastructure

Technological improvements are ongoing. Hardware in areas of critical infrastructure, including smart electric power grids or pipelines and hospitals, however, is often outdated. As a consequence, insurers face higher risk accumulation and unexpected loss potential in the areas of property damage, bodily injury, business interruption, and cyber risk.

Off the Leash: The Spread of 5G Technology

5G will enable wireless connectivity in real time for any device of the internet of things (IoT), such as autonomous cars or sensor-steered factories. Current concerns regarding potential negative health effects from electromagnetic fields are likely to increase. In addition, hackers can also exploit 5G speed and volume to acquire (or steal) more data faster. Major concerns are possible privacy and security breaches as well as espionage.

Limits to Central Bank Tinkering

There is a growing consensus that another economic downturn will need a fiscal response. The (re)insurance industry could benefit if changes to policy bring growth and financial stability. However, a rise in uncertainty, causing higher financial market volatility and declines in asset valuations, is a potential risk factor.

Don't Ask, Don't Tell: The Growth of Genetic Testing

Over the past years, the cost of genetic testing has declined significantly, and, with direct-to-consumer (DTC) testing kits, genetic tests are now increasingly available and affordable for individual use. They have been widely adopted by public health systems and individuals. This has significant implications for life insurers, both in regard to data management and regulatory constraints.

It's Existential: Climate Change and Public Health

The most pronounced risks from climate change affecting human health stem from heatwaves, floods, droughts, fires, and vector-borne diseases. Millions of lives and healthcare services could be at risk. Without action, mortality rates and healthcare costs could soar, with significant consequences for the health, workers compensation and life insurance lines of business.

The report's special feature examines how societies and healthcare systems will need to adapt to a warming world and pinpoints new associated risks such as the greater threat of pandemics due to warming temperatures and air pollution caused by more frequent wildfires.

"Swiss Re and the insurance industry at large first flagged climate change as an emerging risk many decades ago," said Patrick Raaflaub, Swiss Re's group chief risk officer. "The risk has now 'emerged,' but associated and challenging uncertainties still remain, such as the implications on life and health insurance."

Swiss Re describes emerging risks as newly developing or evolving risks that are difficult to quantify but potentially have a significant impact on the insurance industry and society. Emerging trend spotlights examine early development, which may offer both opportunities and risks for the insurance industry in the future.