With mounting pressure coming from regulators and other bodies worldwide, the financial services industry (banks, (re)insurers) will soon need to disclose and stress-test their solvency and profitability to various climate scenarios. The work from the Task Force on Climate-related Financial Disclosures (TCFD) provides guidance as to how it should be accomplished. Physical risk assessment of the impacts of climate change remains however an important challenge for the global (re)insurance industry and the actuarial profession. Bridging gaps between actuarial and climate sciences is therefore essential to increase resilience of the (re)insurance industry to climate change.

In this presentation, we introduce a top-down catastrophe modeling framework founded on climate models to quantify the impacts of climate change at a meaningful spatial and temporal resolution. Full integration of IPCC climate models into actuarial functions is undoubtedly a big data modeling problem requiring appropriate infrastructure and governance. But it also provides invaluable strategic information to the whole industry, investors, homeowners, policy- and decision-makers that in turn help target risk reduction and climate adaptation. We will show how such modeling framework has been successfully implemented for flooding and hurricanes through research partnerships with a Canadian insurance company and an international reinsurer.