The Impact of Climate Risk on the Risk-Taking Behavior of Insurance Companies

In recent years, extreme weather occurring has increased significantly and frequently. Insurance companies, as important financial institutions, are affected by climate risks in their portfolios, claims expenditures, and reinsurance market pressures. At the same time, due to the unique risk-sharing function and asset-liability structure of insurance companies, their sensitivity to climate risks and response mechanisms may be significantly different from those of other financial institutions. Through the two-way fixed effect model, it is found that climate risk has a negative influence on the risk-taking behavior of insurance companies, and this impact is more significant in high-climate risk provinces. The research expects to enrich the relevant theories of insurance companies and provide suggestions for insurance companies to optimize risk management from both theoretical and practical levels.