Climate Risk and Insurance: AI-Powered Modeling and ESG Strategies for a Resilient Future

Climate change is one of the most significant global challenges of our time, with profound economic, social, and environmental consequences. Among the sectors most directly impacted is the insurance industry, which plays a critical role in assessing, pricing, and managing climate-related risks. This thesis investigates how climate change is reshaping the insurance sector, focusing on the evolution of risk models, the differentiation of impacts between businesses and individuals, and the integration of ESG (Environmental, Social, and Governance) criteria into underwriting and strategic decision-making. The research combines a review of academic literature and industry reports with a qualitative and quantitative analysis of real-world case studies. Particular attention is given to the economic and social consequences of climate risk—including damage to infrastructure, business disruption, investment volatility, and social inequality—and how these factors are influencing insurance practices. Through comparative analysis, the study explores how insurance providers are adapting to emerging risks, developing new predictive tools, and shifting market dynamics in response to increasing claims and exposure. The role of ESG frameworks is examined as a means to enhance risk management, promote resilience, and align insurance strategies with sustainability goals. The thesis concludes by highlighting best practices and innovations within the sector, while offering policy and strategic recommendations. It also outlines future research directions in light of the ongoing evolution of climate science, regulatory frameworks, and financial instruments.