Does Climate Change Risk Impact Insurance Credit Risk? Cross Country Evidence

IF 12.5 1区管理学 Q1 BUSINESS

Business Strategy and The Environment Pub Date : 2025-03-20 DOI:10.1002/bse.4252

Jassem Alokla, Panagiotis Tzouvanas, Khaldoon Albitar

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Abstract

While climate change poses a significant financial risk to the insurance industry, research has not yet examined the impact on the insurer's credit risk. This study investigates the impact of climate change risks on credit risk for insurance firms. We develop a novel climate risk measure by contrasting four key components: hydrological risks, temperature extremes, extreme weather events, and water related risks. Utilizing this comprehensive measure, we analyse a global sample of 150 insurance firms across 31 countries from 2001 to 2022. Our findings reveal a significant negative relationship between climate change risks and credit risk, measured by Z‐score, F‐score, and Altman's Z‐score. This suggests that climate risks increase the likelihood of insurance firm defaults. These findings highlight the urgency for proactive climate risk management in the financial sector, including enhanced risk assessment methodologies and adaptation strategies. This research offers valuable insights for various stakeholders in the financial sector including policy makers, credit rating agencies and investors to better understand and manage climate risk exposure in the insurance industry.

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气候变化风险是否影响保险信用风险？跨国证据

虽然气候变化给保险业带来了重大的财务风险，但尚未有研究考察其对保险公司信用风险的影响。本研究探讨气候变迁风险对保险公司信用风险的影响。我们通过对比四个关键组成部分：水文风险、极端温度、极端天气事件和与水相关的风险，开发了一种新的气候风险度量方法。利用这一综合措施，我们分析了2001年至2022年31个国家的150家保险公司的全球样本。我们的研究结果表明，气候变化风险与信用风险之间存在显著的负相关关系（用Z - score、F - score和Altman的Z - score来衡量）。这表明，气候风险增加了保险公司违约的可能性。这些发现强调了金融部门积极主动地进行气候风险管理的紧迫性，包括加强风险评估方法和适应战略。这项研究为金融部门的各种利益相关者提供了有价值的见解，包括政策制定者、信用评级机构和投资者，以更好地了解和管理保险业的气候风险敞口。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Business Strategy and The Environment Multiple-

CiteScore

22.50

自引率

19.40%

发文量

336

期刊介绍： Business Strategy and the Environment (BSE) is a leading academic journal focused on business strategies for improving the natural environment. It publishes peer-reviewed research on various topics such as systems and standards, environmental performance, disclosure, eco-innovation, corporate environmental management tools, organizations and management, supply chains, circular economy, governance, green finance, industry sectors, and responses to climate change and other contemporary environmental issues. The journal aims to provide original contributions that enhance the understanding of sustainability in business. Its target audience includes academics, practitioners, business managers, and consultants. However, BSE does not accept papers on corporate social responsibility (CSR), as this topic is covered by its sibling journal Corporate Social Responsibility and Environmental Management. The journal is indexed in several databases and collections such as ABI/INFORM Collection, Agricultural & Environmental Science Database, BIOBASE, Emerald Management Reviews, GeoArchive, Environment Index, GEOBASE, INSPEC, Technology Collection, and Web of Science.