A Review of Climate-Related Indices for Insurance Risk Management and Resilience

Climate change is reshaping risk worldwide, with many extreme events becoming more frequent and severe. Insurance plays a critical role in societal resilience by providing financial protection against climate-related losses. Climate indices translate climate information into actionable metrics that can support risk assessment, risk management, and resilience. Yet their diversity and broad scope make their application challenging. This paper reviews climate-related indices by grouping them into six categories and summarising their purpose and potential insurance applications. The review highlights how different types of indices can support actuarial functions across the insurance sector and emphasises the need for purpose-built indices that incorporate socio-economic characteristics alongside climate information to improve risk assessment and help address the climate protection gap.