Dynamic Financial Analysis (DFA) of general insurers under climate change

Abstract

Climate change is expected to significantly affect the physical, financial, and economic environments over the long term, posing risks to the financial health of general insurers. While general insurers typically use Dynamic Financial Analysis (DFA) for a comprehensive view of financial impacts, traditional DFA as presented in the literature does not consider the impact of climate change. To address this gap, we extend the stationary DFA framework to integrate climate risk, enabling a holistic assessment of the long-term impact of climate change on the general insurance industry and offering a foundational architecture for the DFA of individual insurers. Our framework captures the long-term ..