NCED
Industry

Climate risk is already on the balance sheet

Understanding it before it aggregates is critical for underwriting, pricing and capital allocation.

Context

For insurers and reinsurers, climate risk is not emerging - it is already embedded in performance. Unlike many industries where climate risk is indirect, insurance is directly exposed through claims, underwriting performance, portfolio aggregation and capital allocation.

Claims frequency & severity
Underwriting performance
Portfolio aggregation
Capital allocation
Reinsurance structures

Insurers must move from understanding risk at the point of claim to understanding risk across the portfolio - before events occur.

Where Climate Risk Sits in Insurance

Insurance exposure is inherently linked to the real economy

Location Risk

Where policyholders are located

Activity Risk

What activities they undertake

Aggregation

How exposure accumulates

Correlation

How risks correlate geographically

Multi-layered risk profile

Physical Risk

Impacts asset damage, claims and loss ratios

Geographic Concentration

Drives aggregation risk

Sector Exposure

Introduces transition and insurability risk

The Structural Challenge

Most insurers hold strong internal data on policies and claims. However, this data is often not structured to support forward-looking climate analysis.

Common Challenges

1Limited linkage between policyholders and environmental risk indicators
2Incomplete visibility of geographic aggregation across portfolios
3Lack of structured analysis for transition risk by sector
4Fragmentation between underwriting, risk and ESG functions
5Difficulty monitoring exposure consistently over time

This creates a reactive operating model - exposure is understood after events occur, aggregation becomes visible too late.

Why This Matters

Without a structured view of climate exposure, insurers face increasing pressure:

Volatility in claims performance
Reduced pricing accuracy
Hidden concentrations of risk
Challenges in capital and reinsurance planning
Growing regulatory scrutiny

Over time, this affects both profitability and resilience.

How NCED Supports Insurance & Re-Insurance

NCED enables insurers to link environmental risk directly to business entities and portfolios, providing a consistent, entity-level dataset.

Map policyholders to physical risk exposure
Identify geographic clustering and aggregation
Assess transition risk across sectors
Analyse exposure across entire portfolios
Support proactive risk management

Key Workflows Enabled

Underwriting Enhancement

Incorporate climate indicators into underwriting decisions

Portfolio Aggregation Analysis

Understand how exposure accumulates across portfolios

Forward-Looking Risk Monitoring

Track changes in exposure as conditions shift

Reinsurance Strategy

Support decisions around coverage and capital allocation

Regulatory & Governance Reporting

Provide consistent evidence for climate-related disclosure and oversight

Strategic Impact

NCED enables insurers to move from:

From

Reactive claims analysis
Fragmented exposure visibility
Point-in-time assessments

To

Proactive risk identification
Structured portfolio-level insight
Continuous monitoring of exposure
Integrated decision-making

For insurers, climate risk is already a financial reality. The advantage lies in understanding that risk before it aggregates - NCED provides the foundation to do so.

Ready to explore NCED for insurance?