Climate change was once a top concern in insurance-linked securities, but better data is changing the picture, a senior investment director told the ILS Convergence 2026 conference.

Speaking at the Hamilton Princess & Beach Club, Cambridge Associates’ Joe Tolen said: “The data has gotten a lot better, and we have gotten investors and ICs much more comfortable.”

For Mr Tolen, improved evidence has shifted the discussion from blanket concern towards assessing how managers identify, measure and manage climate-related risk in portfolios.

“Having the resources and staff on the team is extremely helpful,” he said. “Being able to show how conservative a manager is in their analysis above and beyond the off-the-shelf models is extremely important to us.”

Scott Radke, chief executive and chief information officer at New Holland Capital, said the analytics have evolved a great deal.

He pointed to vendor models, proprietary models and climate-condition data sets that have transformed risk analysis.

“Most of the ILS managers with whom we have conversations are engaged in some way with climate experts to help inform their judgment,” Mr Radke said. “Maybe they are consultants. Maybe they are on staff. There is just a much greater, deeper recognition of the importance of climate in thinking through the individual deal underwriting as well as portfolio construction.”

Mr Radke has seen the modelling conversation change during his career. He said there was no longer any hiding from the climate question, but a straight acknowledgement of the issue and the uncertainty around it.”

“There is a much greater, deeper recognition of the importance of climate in thinking through the individual deal underwriting as well as portfolio construction,” Mr Radke said.

He added that these specifics help institutional investors understand the range of possible outcomes, rather than relying on broad assurances.

“Better quantitative explanations can also help allocators translate technical analysis for trustees and other decision-makers who may not specialise in catastrophe risk,” he said.

Mr Tolen encouraged investors to focus on the period they are actually underwriting. He said risks are assessed over a defined term, often 12 months, and investors should understand that horizon.

“We are not asking investors to bet on the next 30 years of what could happen with climate change,” he said.

Mr Radke said climate risk should not be the thing that deters people from investing.

Nidhi Sharma, director and senior portfolio manager at Alpha Alternatives, PSP Investments, said it is important to model different scenarios, such as a soft or hard market, and expectations of losses and events.

She mentioned diversification such as casualty ILS, an emerging market where institutional investors provide direct capital to back casualty reinsurance risk.

“I’m not saying that is particularly attractive, but that is diversification in the sense that if you have softening in some parts of the insurance ecosystem, maybe you pivot to something else which is not,” she said. “You have to have your eyes wide open going from one type of insurance risk to the other.”