Adrian Cox, CEO of Beazley, speaking this morning in London at an AM Best event, explained how Beazley sees climate litigation risk as a rising issue that the company needs to consider in its underwriting.
He stated that climate liability risk arises from parties that have suffered from loss or damage from physical or transition risk, and are seeking to recover from those who they hold responsible for it, which mainly includes governments, companies, and institutions.
Cox said: “This risk arises from three sources: not doing enough. i.e. failing to meet public policy objectives, and social expectations. Not doing what you promised to do, or greenwashing, which is an area where we see significant risk where businesses are found to have misrepresented or miscommunicated the environmental impacts of their business or their role in climate change.
“And finally, doing harm, and these are lawsuits against companies for their current or potential future contributions to climate change. And all three are leading to an uptick in claims.”
Moreover, Cox also highlighted how climate lawsuits are beginning to see an increase globally.
“The potential scope for this litigation is broad, and firms all over the world are already beginning to face litigation for their participation in, or failure to meaningfully prevent manmade climate change.”
Adding: “So to address this threat, we’ve built specific greenwashing realistic disaster scenarios to assess how they could impact our portfolio. And we’ve engaged specialists advice and expertise to understand how this risk is currently unfolding and how that may evolve in the future.”
Lastly, in regards towards Beazley’s approach to physical risk, Cox noted that the company is actively exploring this problem with its clients, and creating a feedback loop that can help clients to protect their business, “ensuring that they’ve got the right protection in place, and more importantly, the right risk management in place so that the cost of this risk too has a chance to go down and not just up.”
