INFUSE Recap: Why Climate Risk Now Lives in the Underwriting Workflow

Climate risk has shifted from a theoretical future concern to a live operational issue that is reshaping underwriting workflows across specialty insurance. In a recent Send Infuse webinar, host Tony Taquini spoke with two leaders working at the intersection of climate science, regulation, and underwriting practice: Nerina Wright, an independent transformation and climate risk advisor, and Dr. Marie Ekström, a climate scientist and climate risk advisor at Gallagher Re. Their discussion made one thing clear: climate risk is no longer an externality. It now lives inside the underwriting workflow itself.

Climate Losses Are Outpacing Models

The conversation opened with a stark reminder that climate‑driven losses are already exceeding expectations. Nerina pointed to Italy’s 2023 floods, where industry losses were initially estimated at $2.2 billion but ultimately settled at $6 billion. As she explained, this wasn’t because the science was wrong, it was because “the postcode‑level exposure data never reached the reinsurance submission.” That operational miss tripled the loss outcome.

France’s 2022 hailstorms told a similar story, with more than €4.8 billion in losses and over a million claims, it was three to four times more than previous records. In the United States, the Los Angeles wildfires of January 2025 saw early estimates of $20–30 billion climb to nearly $40 billion within a year resulting in a 60% loss creep.

Across jurisdictions and perils, the pattern is consistent. As Nerina put it, “The question is no longer whether climate matters. The desks know that it does. The question is whether the data captured at the bind has the granularity to price it.”

The Science Behind the Shifts and it's Limits

Marie, drawing on two decades of climate research, explained why traditional catastrophe models struggle to keep pace. Insurance tools are built on historical relationships: fixed hazard, exposure, loss linkages that assume the past is a reliable guide to the future. Climate science, however, is built on dynamic, nonlinear systems that evolve across multiple plausible pathways.

This creates a fundamental mismatch. As Marie noted, “the tools are not developed to be applied in a climate scenario approach where we don’t understand how losses might occur.” Near‑term projections may be reasonable, but the further insurers look into the future, the more they must question whether their tools hold. Climate models are designed to explore ranges of plausible futures, not to predict a single outcome.

She also highlighted a common industry pattern: when new regulatory expectations emerge, sectors often start by trying to use familiar tools for unfamiliar tasks. “Eventually,” she said, “firms realise this isn’t really the right thing to do. They start to ask different questions.” Insurance is now entering that phase of its learning curve.

The Real Fault Line: Information That Doesn't Flow

Both speakers agreed that the biggest challenge isn’t the science or the models but that it is the operational architecture inside insurance organisations.

Climate‑relevant insights generated at the underwriting desk rarely make their way into reserving, capital, reinsurance purchasing, or board‑level decision‑making. Each function performs well in isolation, but climate risk requires cross‑functional translation. As Nerina observed, “information gets summarised, doesn’t get translated, and no one owns the translation.”

This is where the system breaks. Underwriters may be running local flood maps, tracking wildfire accumulation, and protecting aggregates, but “the desk‑level insight stays locked at the desk.” Without a mechanism to move that insight through the organisation, the models used for pricing and capital allocation fail to reflect the true shape of the risk.

Marie echoed this, noting that governance structures are built for efficiency, not for handling deep uncertainty. “We have a very sequential way of passing information on,” she said, “but what needs to happen is really about connecting those chain links together to talk about how we do things in a more meaningful way.”

Climate Risk Is a Prudential Issue, Not a Sustainability One

One of the most important reframes in the discussion was Nerina’s point that climate risk is not an ESG exercise. It is a prudential one. She referenced an MSCI survey showing that 69% of insurers do not link climate considerations to executive performance. Her view was direct: if climate risk isn’t embedded in the metrics leadership is measured on, “it gets treated as a soft compliance cost.”

But the real consequences show up in capital. Reinsurers price uncertainty into treaty terms. Capital providers price uncertainty into syndicate costs. Rating agencies price uncertainty into credit. Ultimately, that uncertainty reduces underwriting capacity and affects the bonus pool.

This is why, as Nerina put it, “once a CRO or CEO sees that failure to close the cross‑functional gap restricts their own underwriting capacity, it stops being an ESG exercise and becomes a commercial priority.”

What Firms need to Build Next

The panel agreed that insurers don’t need more analytics, they need integration. Nerina offered a simple diagnostic any firm can run: take one material climate scenario and trace it through the organisation. What changed in pricing? What changed in capital or reinsurance purchasing? What changed in board‑level decisions?

If the answer is “nothing,” the organisation has an operational gap.

Marie added that firms must also rethink how they approach time horizons. Near‑term risks may be manageable with existing tools, but far‑future risks require different approaches, including monitoring climate‑risk drivers, understanding adaptation pathways, and aligning firm‑level decisions with sector‑level resilience expectations.

The Path Forward

Climate risk is no longer an abstract future concern. It is already reshaping loss patterns, capital requirements, and underwriting decisions. As Marie put it, “climate risk is more than data layers and output from catastrophe models. It’s about understanding what risks might look like at different time horizons.”

And as Nerina emphasied, the work now is to address the materiality gap by ensuring that climate‑relevant insights flow from the desk to the board and back again.

The underwriting workflow is changing. Climate risk now lives at its core.

Watch the full webinar here.