Response to Climate Change


Ongoing climate change has been causing natural disasters to grow in frequency and magnitude around the world. As a result, humanity is now exposed to a rising risk of encountering disaster of an unprecedented scale. In addition to the potential occurrence of such a major disaster, even a moderate pace of climate change would undermine the stability of corporate business activities and the daily lives of citizens, thus bringing about physical and financial losses. Climate change-induced natural disasters are huge risk facing nations across the globe. As an insurance company, there is a serious concern about a potential scenario in which growing benefit/claim payments erode the global insurance system, which has close relation with these risk.
Although unable to readily halt climate change, insurance companies must take related measures in preparation for mounting risk. The MS&AD Insurance Group will continue to deliver security and safety to local communities by providing sufficient levels of protection by the use of reinsurance and other various means for losses from a major disaster. Moreover, we will continue to further adapt to climate change by providing appropriate services designed to prevent or reduce damage and losses of customers which is caused by climate change-induced weather disaster. At the same time, through its insurance and consulting services, the MS&AD Insurance Group will support new businesses serving to mitigate climate change.

Major Results in Fiscal 2016

Identifying Risks and Providing Information on Risks

Risk Management for Prevention of Natural Disaster Damage

Due to climate change associated with global warming, natural disasters have occurred frequently around the world and caused tremendous damage. The MS&AD Insurance Group has offered measures to mitigate risks based on detailed risk analysis and research by utilizing natural disaster risk models developed by InterRisk Research Institute & Consulting.

New risk assessment system predicting flood damage

In May 2017 MSI and ADI of the MS&AD Insurance Group developed a new risk assessment system to predict flood damage (“new flood model”) in collaboration with InterRisk Research Institute & Consulting, Inc. and a major US provider of catastrophe risk modeling software. The new flood model makes it possible to predict flood damage caused by seasonal rain fronts and torrential rain as well in addition to caused by typhoons. Furthermore, it is capable of predicting not only the damage of flooding rivers but also the urban type of flooding damage where rainwater overflows because of insufficient water drainage and even the integrated damages due to wind and flood including storm surges caused by typhoons. The MS&AD Insurance Group will continue to improve risk management in natural disaster areas and strengthen consulting services through the use of damage prediction model.

Launch of Consulting Services for Water Disaster

InterRisk Research Institute & Consulting of the MS&AD Insurance Group provides services to reduce loss by water disaster.
Targeting river floods, inundation and high tide, we analyze expected depth, time and damage of floods with a flood inundation simulation based on publicly available materials such as hazard maps and field research. By proposing both software and hardware measures based on those analysis results, we also support flood risk mitigation and the development and improvement of business continuity management (BCM) of companies.


Sample of analysis results
Sample of analysis results

Risk Management for Conservation and Utilization of Natural Capital

Natural bounty provided by biodiversity (ecosystem services) is the basis of our lives and business activities. A business model in consideration of biodiversity supports the sustainability of the entire society including companies. 17 goals of the Sustainable Development Goals (SDGs), which were adopted at the Sustainable Development Summit in September 2015, can be achieved by the four goals which is related to natural capital and a stable climate system as a basis. The MS&AD Insurance Group works on the conservation and utilization of natural capital to build a sustainable relationship between natural capital and business activities.

Assessment Services for Impact of Natural Capital

Japanese companies which conduct business globally in particular, proactive disclosure of information about the impacts of business activities on natural capital is now required socially. If the planned business activity has a possibility of causing substantial damage to natural capital, such a business will entail a substantial risk. For such companies, InterRisk Research Institute & Consulting is providing services to quantitatively assess impacts on natural capital.

Brief Assessment Services for Water Risks

An increasing number of areas around the world are witnessing the depletion of water resources due to climate change and population increase of developing countries, etc. Operations of companies are threatened in some cases. Against such a background, there are increasing pressure against companies to ascertain and disclose its water risks. We are also seeing an increase in major manufacturers requesting their suppliers to ascertain and disclose water risks, as well as investors requesting disclosure of water risk information. InterRisk Research Institute & Consulting is providing services to assess water risks (water depletion, water disasters, etc.) for companies' bases in Japan and overseas.

Comprehensive Consulting Services on Biodiversity

Biodiversity is an environmental topic that has begun to draw much attention in recent years. For example, there have been cases where specific companies have come under criticism from society due to the adverse impact that raw material procurement activities have on biodiversity, developing to become management problems. Hence, there has been a rise in the number of companies that are beginning to implement risk management measures, in particular large companies. InterRisk Research Institute & Consulting provides comprehensive consulting services on biodiversity in business activities. Moreover, it is supporting the expansion of greenery in cities taking biodiversity into consideration through consultation of corporate greenery.

Supporting the Enhancement of Environmental Efficiency and Use of Sustainable Resources

The use of sustainable resources and enhancement of environmental efficiency across various businesses not only increases the sustainability of the global environment, it also assures sustainable growth of the companies. Through the support for environmental efficiency and use of sustainable resources, the MS&AD Insurance Group is contributing to the global environment and the growth of our customers.

Consulting Services Related to CSR

As measures for "Threats and Opportunities," "Value Chains," and "Biodiversity" in sustainable management required by ISO 14001, InterRisk Research Institute & Consulting provides consulting service regarding CSR including the acquisition and improvement of the Environmental Management System (ISO 14001, Eco Action 21) certification, environmental risk analysis and support for the development of CSR reports.

Launch of Comprehensive Compensation Plan for Wind Power Generation

MSI and InterRisk Research Institute & Consulting provide Service to Prepare Risk Survey Report on Wind Power Generation Facilities. With this service, MSI comprehensively assesses risks related to the business as a whole based on various conditions, including locations and facilities, for wind power generation customers, and provides a report. Wind power generation has a possibility of having lower operation rates and incurring accidents depending on locations, facility designs, and maintenance conditions, etc., while it is an energy source which has a lower power generation cost than other renewable energies to secure economic performance. Accordingly, MSI aims to encourage customers to take counter-measures for these risks, and at the same time support their stable business operation.

Issuance of "Handbook for Accidents and Failure Risks of Offshore Wind Power Generation Facilities"

MSI and InterRisk Research Institute & Consulting issue the "Handbook for Accidents and Failure Risks of Offshore Wind Power Generation Facilities." The purpose is to provide information to appropriately understand accident and failure risks of offshore wind power generation, which contribute to the development of renewable energy. Offshore wind power generation has the advantage of having richer wind energy available and fewer restrictions on the location for facility expansion than land wind power generation, and is expected to be a promising renewable energy source in Japan, whose land is surrounded by the sea.

Issuance of "Handbook for Photovoltaic Power Generation Business Accident Risks"

MSI, ADI and InterRisk Research Institute & Consulting issue the "Handbook for Photovoltaic Power Generation Business Accident Risks," a co-development tool by the three companies, to support stable operation of the photovoltaic power generation business. While the photovoltaic power generation business has rapidly expanded in the last several years, accident risks arising from natural disasters, etc. have also become obvious along with it. This handbook provides information to assess these accident risks appropriately.

Identifying risks and providing information on risks

Alerting Service of Weather Information

Screen of Alerting Service<br/>of Weather Information
Screen of Alerting Service
of Weather Information

MSI, in cooperation with Weathernews Inc., has provided the Alerting Service of Weather Information for the first time in the non-life insurance industry to policyholders of construction insurance ("Building All-in", "Civil Engineering All-in") and fire insurance ("Property Master", "Business Keeper") or transport insurance ("Full Line", "Support One") for companies.
This service sends alert mails to customers when a forecast for precipitation amount, wind speed and amount of snowfall exceeds standards(*) at up to five locations that customers preset on the dedicated website, or when lightning is observed at locations within the standard values(*) from the observation point. Through provision of weather information, we will help prevent and mitigate damage caused by natural disasters and support business activities of our customers.


(*) Customers preset two levels: Alert and Warning. Regarding lightning, the distance is between the observation point and the point struck by lightning.

Business Tasks with the concern for Climate Change as ClimateWise Members (UK)

MS Amlin participates in ClimateWise. ClimateWise is an organization set up through a collaboration by the insurance industry, the University of Cambridge, and research institutions. It makes use of the specialized knowledge and experiences of the insurance industry related to natural disasters for work on the climate change issue.
The MS&AD Insurance Group has participated in workshops which discuss climate change patterns and damages in each country and region based on the natural disaster risk analysis by risk management specialists. We are supporting the activities of ClimateWise by sending panelists to participate in international conferences and the submission of recommendations.

Preventing risks from being realized / reducing the impact of risks

Providing Products and Services to Support Measures against Climate Change

Extreme weather caused by climate change has various impacts on business activities. By providing measures to mitigate such impacts, we can support the development of sustainable business in a society with the influence of climate change. The advancement of global warming is unavoidable, and therefore, appropriate adaptation measures are now crucial to success in business.

Weather Derivatives

MSI and ADI offer weather derivatives that enable customers to mitigate fiscal losses arising from bad weather. When sales decrease or costs increase due to rainfall, overly hot or cold summers, extremely cold or warm winters and other weather-related phenomena, or power generation is insufficient due to the lack of sunshine in photovoltaic power generation or other renewable energy business, we support our customers by underwriting weather derivatives.
Overseas as well, MSI sells weather derivatives, primarily in North America and Europe, through its U.S. subsidiary MSI Guaranteed Weather. In December 2016, it started global marketing of weather derivatives utilizing NASA and other satellite observation data for the first time as a Japanese non-life insurance group. This enabled us to provide weather derivatives in regions where underwriting had been difficult because precise data was not available. We will actively sell weather derivatives globally including in Asia, South America and Oceania to support business expansion overseas and local economic activities of customers.

Comprehensive Compensation Plan for Food and Agribusiness

For the agricultural and the livestock industries, unfavorable weather risks exist. These include examples such as the lack of sunlight, abnormally low and high temperatures, and lack of rainfall, which can result in a poor harvest for agricultural raw materials and a decline in the output of animal products. As a result of these affects, market prices would surge.
The "Comprehensive Food and Agribusiness Compensation Plan" sold by MSI offers climate derivative products for unfavorable weather risks, based on a climate index which influences the yield and output of target agricultural crops and animal products.

Support to Reduce Water-related Disaster Damage at Ports

Sample of Guidance materials
Sample of Guidance materials

Due to climate change, flood disasters caused by incidents such as typhoons or high tides are causing more damage which is beyond past assumptions. For instance, direct impacts by large-scale typhoons coupled with high tides can lead to major losses if they impact finished vehicles being stored in port areas just prior to their export. On the other hand, through the execution of appropriate countermeasures in advance, the damage caused by such disasters can be lessened.
MSI offers customers detailed guidance on expected typhoon routes and high tide times ahead of their occurrence and proposes countermeasures such as the transfer of vehicles and use of waterproof covers. We are working to support efforts to lessen the damage caused to our customers.

Pacific Catastrophe Risk Assessment and Financing Initiative Insurance Facility

MSI is an underwriting company for insurance covering natural disaster risks in Pacific Catastrophe Risk Assessment and Financing Initiative (PCRAFI) Insurance Facility, which was established jointly by the Japanese government and the World Bank. This facility is designed to finance quick reconstruction funds to nations and regions in the Pacific Islands (Samoa, Tonga, Marshall Islands, Vanuatu, and Cook Islands), where insurance markets have not matured sufficiently, that are afflicted by natural disasters (cyclones and earthquakes) of a certain scale. By participating in this facility, MSI intend to support measures against natural disasters in the Pacific area, and fulfill social responsibilities for the area.


[The System Scheme]
Through derivative trading with the International Development Association of the World Bank, we are providing financial support for reconstruction in the event of natural disasters of a certain magnitude in Pacific Island countries.

Support for the Flood Reinsurance System through Participation in Flood Re

Since February 2017, MS Amlin has been participating in Flood Re, a flood reinsurance system established by the U.K. government and the Association of British Insurers (ABI). Flood Re is a reinsurance fund for personal flood insurance and administered and managed by the insurance industry. It supports high-flood-risk households by providing them with a wide range of preparation measures for flood disasters.

Providing Products and Services that Leads to Climate Change Mitigation

New businesses have emerged that address the worsening issue of global warming. Through providing insurance and consulting services, we contribute to stimulating the economy and mitigating climate change by proactively supporting the growth of such businesses. In addition, we are working to develop and offer products that lead to a reduction in the burdens placed on the environment.

Support of Renewable Energy Projects

We are indirectly supporting the wider adoption of renewable energy by providing various services or information for risk assessment and consulting, as well as selling various insurance products that comprehensively cover a wide variety of risks surrounding renewable energy business operators (property damage, loss of profits, liability of damage, etc.).

Photovoltaic Power Generation

・Comprehensive Mega Solar Compensation Plan
・Photovoltaic power generation business accident risk handbook, mega solar facilities earthquake and tsunami risk analysis and sunshine evaluation, mega solar facilities hazard information investigation, photovoltaic power generation comprehensive risk management

Wind Power Generation

- Comprehensive small wind power generation compensation plan
- Wind power generation facilities handbook for accident risk assessment, service for development of wind power generation facility risk survey reports, handbook for small wind power generation facilities, comprehensive wind power generation risk management

Biomass power generation

- Comprehensive biomass power generation compensation plan
- Handbook for biomass power generation facilities

Small- or medium-sized water power generation

・Comprehensive Coverage Plan Small- and Medium-sized Hydro Power Generation Compensation Plan
・Comprehensive small- or medium-sized water power generation risk management

Environmentally Friendly Automobile Insurance

The MS&AD Insurance Group makes efforts to achieve a sustainable global environment by developing and providing products in its core product area of automobile insurance that helps reduce environmental burdens.