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For an accurate measurement of just how much the global climate has changed, one needs to look no farther than Mexico. Couched between the Gulf of Mexico to the east and the Pacific Ocean to the west, Mexico has a diverse topography and climate – from deserts to tropical forests to beaches. Such as widely diverse ecosystem impacts the country in many ways.

Pablo Crain, Country Manager for AXA XL’s Mexican insurance operations, sees firsthand the impact of a changing climate on the business, culture, and the intrinsic relationship between the land and its residents. As much of the world grapples with the impact from COVID-19, countries like Mexico have already seen significant impact to their ecology and economy thanks to a more pervasive threat: climate change.

Q: What impacts are being seen in Mexico that can be attributed to climate change?
Crain: The tourism industry has suffered from what’s being called the Great Atlantic Sargassum Belt, which is a nearly 6-mile long stretch of slimy, smelly brown seaweed. Due to a combination of global warming and deforestation in South America, this seaweed, which is a natural part of the ecosystem, has multiplied exponentially.

As farmers clear forests and used fertilizers to be able to plant, the leeching of those chemicals into the Amazon waters (which flow into the Atlantic) has fertilized the sargassum. The once pristine beaches on Mexico’s eastern shores are rendered unusable as tons of seaweed litters the beaches and waters. If our oceans are not healthy, our tourism industry will not be healthy, and a large chunk of the economy will cease to exist.

On the Pacific side, the Mexican fishing industry has seen the effects of climate change and warmer ocean temperatures. Any disruption in the ocean’s ecosystem has a sizable impact on the food supply. Then there are the impacts felt by sharks, sea turtles, and other aquatic life.


Q: Climate change has also been linked to more severe weather patterns. How is that affecting the country?
Overall, hurricanes have become more frequent and more severe over time. As hurricane season heats up, the concern becomes how these storms will impact an already stressed ecosystem and economy. We have established communities in beautiful places that we are now finding are the most vulnerable to hurricanes and tropical storms. Those disaster-prone areas can expect to see increasing numbers of storms and more serious damages.

Having the right conversation with clients in these areas is critical. With an insurer who is located in your area, you get instant understanding of the challenges your home, your business faces. Your insurer should act as a consultant, and as such, should know the unique regional challenges that could pose serious threats. It’s not about having off-the-shelf insurance products that solve your problems. It’s about giving you the tools to help you understand the issues. That can help you find ways to lessen the severity of the risk, where possible.

For many climate-related risks there is no one-size-fits-all solution. Those risks will continue to exist, and most likely will continue to grow. We try to help clients understand that risks are part of a continuous conversation. In order to deal with it best, we encourage clients to remain open to the coming changes, and to think of risk mitigation as a process. Working with your insurer, you can evaluate your risk levels regularly and make adjustments that fit your business.


Q: That means clients should understand their protection gap, correct?
Correct. Know the difference between the economic loss and the insurance loss. How much of the potential economic loss is backed up by insurance? How much of that gap is your company able to cover financially?

Another aspect related to the protection gap is at governmental level. How much assistance is available through a country’s public sector risk management programs? If you think about how communities suffer and the level of losses, they incur vis à vis how much of that is actually insured, it's mind blowing. The USA in particular is a country with a relatively high penetration of insurance and yet, there's only so much they have been able to recover from the insurance industry after a disaster.

In countries such as Mexico and Costa Rica, there is even less property coverage and a small penetration of insurance overall relative to GDP. So, most of the losses will eventually be borne not only by the society, but more importantly by the government, which will have to address losses by using funding that would have otherwise been allocated for education or infrastructure and the like.

In this regard, Mexico is leading the way. In the 1990’s, Mexico created a disaster fund backed by a CAT bond as of 2006. That approach has protected the country from a catastrophic financial hit should disasters continue to multiply and worsen.

Q: How is AXA XL helping their customers deal with climate change?
We take a more holistic approach to educating our clients and helping them understand the impacts on their businesses and livelihoods. We are regionally and locally focused because we have the teams doing business in those areas every day. The experts live and work in Mexico, so what impacts our customers impacts them, as well. That brings a level of experience needed to develop strategies for mitigating the localized risks as well as the larger, more globally impactful risks that climate change brings.

In addition, through AXA Climate, we address environmental exposure. We have dedicated risk resources and tools to helping understand and alleviate climate-related risks. From satellite imagery to parametric insurance to a library of resources, our goal is to give clients a deeper dive into the challenges of climate change, the impacts it will have on their businesses, and the strategies and tools available to them to help minimize the risks.

That includes insurance products that can help offset the costs of climate-related losses. Off-the-shelf products, as I mentioned before, do not address the specific needs of the client. Instead, the conversation needs to be broader, and should address what clients are prone to and exposed to in their specific location. From there, they can put together a sound plan for addressing the costs of climate change in their own location.

Pablo Crain is the Country Manager for AXA XL in Mexico. He can be reached at


Global Asset Protection Services, LLC, and its affiliates (“AXA XL Risk Consulting”) provides risk assessment reports and other loss prevention services, as requested. This document shall not be construed as indicating the existence or availability under any policy of coverage for any particular type of loss or damage. AXA XL Risk. We specifically disclaim any warranty or representation that compliance with any advice or recommendation in any publication will make a facility or operation safe or healthful, or put it in compliance with any standard, code, law, rule or regulation. Save where expressly agreed in writing, AXA XL Risk Consulting and its related and affiliated companies disclaim all liability for loss or damage suffered by any party arising out of or in connection with this publication, including indirect or consequential loss or damage, howsoever arising. Any party who chooses to rely in any way on the contents of this document does so at their own risk.

US- and Canada-Issued Insurance Policies

In the US, the AXA XL insurance companies are: AXA Insurance Company, Catlin Insurance Company, Inc., Greenwich Insurance Company, Indian Harbor Insurance Company, XL Insurance America, Inc., XL Specialty Insurance Company and T.H.E. Insurance Company. In Canada, coverages are underwritten by XL Specialty Insurance Company - Canadian Branch and AXA Insurance Company - Canadian branch. Coverages may also be underwritten by Lloyd’s Syndicate #2003. Coverages underwritten by Lloyd’s Syndicate #2003 are placed on behalf of the member of Syndicate #2003 by Catlin Canada Inc. Lloyd’s ratings are independent of AXA XL.
US domiciled insurance policies can be written by the following AXA XL surplus lines insurers: XL Catlin Insurance Company UK Limited, Syndicates managed by Catlin Underwriting Agencies Limited and Indian Harbor Insurance Company. Enquires from US residents should be directed to a local insurance agent or broker permitted to write business in the relevant state.