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The Confidence Gap: Why Insurers Think They''re Ready for Climate Risk, and Why Investors Don''t Believe Them
A 2023 survey of 70 senior insurance executives by WTW and the Climate Group reveals a stark perception gap: while 84% of insurers believe their firms are adequately prepared for physical climate risks, only 22% of investors share that confidence. This article analyzes the core reasons behind this ''confidence gap,'' exploring whether it stems from divergent risk assessment frameworks, strategic misalignment, or a fundamental disconnect in how preparedness is measured. We examine the long-term implications for capital allocation, insurance pricing, and market stability, arguing that this gap represents a significant systemic risk beyond individual firm readiness.