Ensuring Planetary Solvency

The Journal, The Chartered Insurance Institute

April 10, 2025

https://thejournal.cii.co.uk/2025/04/10/ensuring-planetary-solvency

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My Op-Ed for The Journal of The Chartered Insurance Institute.

The estimates keep rising: “The global economy could face a 50% loss in domestic product (GDP) between 2070 and 2090 unless immediate policy action is taken to address the risks posed by the climate crisis. Populations are already being impacted by food system shocks, water insecurity, heat stress, and the spread of infectious diseases. If left unchecked, the likelihood of mass mortality, large-scale displacement, severe economic contraction, and conflict increases.”

As #climatemodels increasingly tend to be overwhelmed by climate events, the drivers of this inadequacy have been laid bare by a pre-eminent actuarial body – Institute & Faculty of Actuaries (#IFoA) in their recent release: Planetary Solvency – finding our balance with nature. For a change a critical function of insurance – actuarial science – converges into climate science. I allude to the brilliant work of Professor Johan Rockström on planetary boundaries.

Sandy Trust, lead author: “Nature is our foundation, providing food, water and air, as well as the raw materials and energy that power our economy. Threats to the stability of this foundation are risks to future human prosperity which we must take action to avoid.”

A ‘Planetary Solvency Risk Dashboard’ – developed by IFoA in collaboration with University of Exeter – makes it possible to visualise and assess the risks of exceeding planetary boundaries. It includes a novel risk commentary on nature, society and economy.

What next? After this spot-on diagnosis by IFoA, would insurers choose to follow their prescription? Or would they merrily continue in a #BAU mode? Thereby leaving behind a legacy of aiding and abetting climate breakdown?