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Climate risk assessment in insurance is a critical component of understanding and mitigating the impacts of climate change on the insurance industry. This paper provides a comprehensive review of climate risk assessment practices in the insurance sector, focusing on both the United States (USA) and Africa. The study explores the unique challenges and opportunities each region faces in the context of climate-related risks. In the USA, a mature and well-established insurance market grapples with the increasing frequency and severity of climate-related events. Hurricanes, wildfires, and floods have become more prevalent, necessitating a thorough evaluation of risk models and actuarial practices. The paper delves into how American insurers are adapting to these challenges through advancements in technology, data analytics, and collaboration with climate scientists. The role of regulatory frameworks and government initiatives in shaping the industry's response is also explored. Contrastingly, the African insurance landscape faces its own set of challenges in the wake of climate change. The continent is particularly vulnerable to extreme weather events, such as droughts and storms, impacting both agriculture and infrastructure. The paper investigates the unique considerations in climate risk assessment for African insurers, including the need for localized data, community-based resilience initiatives, and the potential for innovative insurance products that cater to the specific needs of the population. A comparative analysis highlights the disparities in resources, infrastructure, and regulatory frameworks between the two regions. It also underscores the importance of international collaboration in sharing best practices and facilitating the transfer of knowledge and technology. The paper emphasizes the role of insurers not only as financial risk mitigators but also as key stakeholders in promoting climate resilience and sustainability. This paper provides valuable insights into the evolving landscape of climate risk assessment in insurance, offering a nuanced understanding of the challenges faced by the USA and Africa. The findings aim to inform policymakers, insurers, and other stakeholders, fostering a proactive approach to climate resilience in the global insurance industry.
Odunaiya et al. (Sun,) studied this question.