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Insurance Authority to continue nurturing ecosystem for green insurance

14th January 2022 - Author: Katie Baker

The Hong Kong Insurance Authority (IA) recently hosted a discussion where insurance professionals shared their predictions on the industry’s participation in initiatives for addressing climate change, noting the emerging opportunities ahead.

hong-kongWith climate change remaining as an imminent threat facing humanity, governments worldwide have created action plans to combat its impacts, with the insurance industry also playing a vital role in the joint effort in managing and mitigating climate-related risks.

Tony Chan, Associate Director, Policy and Development of the IA explained how Hong Kong will play its part in combating climate change and consolidate its status as a regional green and sustainable finance hub.

“The IA has been actively participating in the Green and Sustainable Finance Cross-Agency Steering Group to steer initiatives, and encouraging the industry to contribute to the cause in a multi-pronged approach through public advocacy, corporate disclosure, risk modelling, differential underwriting, product innovation and impact investment,” he said.

Discussing the implications of local and global climate-related initiatives on the insurance industry, the panel noted the importance of the Common Ground Taxonomy which provides reference for identifying environmentally sustainable activities, and growing needs for climate-related risk management, from the perspectives of a risk underwriter and an impact investor.

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The growing attention on green and sustainable finance presents enormous business opportunities and solutions for the insurance and risk management sectors, an example of which is the first issuance of a catastrophe bond in Hong Kong last October.

During the discussion, the panelists shared their insights on other areas of potential opportunities, such as the development of index-based or parametric products and solutions for mitigating climate-related risks.

“As part of our effort to consolidate Hong Kong’s status as a global risk management centre, the IA will continue to nurture a vibrant ecosystem for green insurance with a view to enabling the insurance industry to develop while delivering its social value,” Chan added.

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