Moses Ojeisekhoba, Chief Executive Officer (CEO) for Reinsurance at Swiss Re, has warned that following the outbreak of the COVID-19 pandemic, 2021 could be a “pivotal year” for the re/insurance industry to help push for more societal resilience to climate change.
As countries look to a sustainable pandemic recovery, and with the UN’s climate change conference COP26 on the horizon, Ojeisekhoba says that re/insurers are “pushing against an open door” when it comes to the drive for progress.
“As an industry, we need to help improve understanding of the risks we all face, and support efforts to mitigate both the physical and financial impacts of climate change,” he stated.
“We have a unique opportunity now to shape and drive action that will benefit us all – and secure a prosperous and sustainable future for our children and grandchildren.”
Ojeisekhoba asserted that global re/insurers have a “key role” in helping to decarbonize economies and mitigate climate risk, but decisive action is needed and closing the protection gap will be central to this effort.
To achieve this, Swiss Re is leveraging data and technology to evolve its models, for example through its new partnership with radar satellite-based flood monitoring provider ICEYE.
But Ojeisekhoba says re/insurers can also play an important role in advancing the development of nascent technologies and low carbon alternatives by providing essential coverage to allow innovation to thrive.
While traditional insurance products are already supporting growth in the renewable energy industry, new sustainability solutions such as revenue insurance covers for no-sunshine or no-wind or for electric vehicles are also accelerating the energy transition.
“Supporting the growth of entirely new technologies like carbon capture, storage and removal is equally important as it is ambitious,” Ojeisekhoba said.
“It’s estimated that the carbon removal industry will reach the size of the current oil and gas industry by 2050. And there’s a real opportunity to leverage our existing risk knowledge to serve this emerging industry with insurance offerings. However, carbon removal alone cannot replace the need to move away from fossil fuels.”
The Swiss Re exec further suggested that a global carbon tax could be an important tool to incentivise low-carbon behaviour and decision-making.
At Swiss Re recently announced a triple-digit real carbon levy on both direct and indirect operational emissions such as business travel, and Ojeisekhoba believes this same logic could be applied on a wider scale by the insurance industry, using such a carbon levy to aggressively finance green technologies.