Reinsurance News

Insurance crucial for Asia to face climate challenges

17th November 2022 - Author: Kassandra Jimenez-Sanchez

Insurance has a crucial role in anticipating, identifying, and managing climate-related risks in Asia, says Anusha Thavarajah, Regional Chief Executive Officer, Allianz Asia Pacific.

asia-globeTemperatures are rising two times faster in Asia than in global average, and the continent is at the frontline of the risks of climate change. Additionally it is highly susceptible to its real-world impact, with limited means available to manifest effective responses that help mitigate climate challenges, Thavarajah noted.

Without immediate intervention, alarming projections like lethal heatwaves, and rising sea level, could become a reality and generate unprecedented human and economic costs, Thavarajah highlighted.

She said: “Insurance has a crucial role in anticipating, identifying, and managing climate-related risks, especially in Asia, which is on the frontline of climate change yet still highly vulnerable due to low insurance penetration and a wide protection gap.”

Insurers like Allianz, can help regions like Asia to face the climate crisis by supporting the continent’s net-zero transition, which will also unlock new business potential, according to Thavarajah.

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She said: “It is important to position ourselves early, identify the sectors in Asia to most benefit from the transition, and build up expertise to capture these new opportunities in Life/Health (L/H), Property & Casualty (P&C) and investment.

“In our Asia strategy – called Pinnacle 2030 – sustainability is one of the key enablers to drive growth. We focus on our ecological commitment in line with our group commitments, our social responsibility to the communities in which we operate, and our governance, by integrating sustainability and ESG aspects in our business, ensuring strong compliance processes, data protection and security.”

Thavarajah explained that the insurer’s support for net-zero transition comes in layers, she said: “First, we want to ensure that our own in-house decarbonization journey remains key and on track. From the social perspective, all our entities have strong corporate citizenship programs in place which combine a long-term vision with the ability to quickly mobilise local resources to create a lasting impact for global society and local communities as well as drive employee engagement.

“The next step will be about finding sustainable business opportunities across Life, Health, Retail and commercial P&C. A recent McKinsey report on sustainable business opportunities in Asia shows that the addressable market size for green businesses is expected to reach between $4 to $5 trillion by 2030, largely driven by the massive amounts of investments that are required to support the “just transition” initiative.”

According to Thavarajah some of the business opportunities they are able to see in Asia are around electric mobility and social action.

She said: “Allianz Insurance Singapore has become a leading insurer of EVs in Singapore and we expect further growth from this sector in other markets in the region. In the context of social action we see microinsurance product offerings in various OEs including Allianz Malaysia and Allianz Indonesia. These products provide access to insurance to customers who may not have had prior exposure to insurance products as well as insurance cover to low-income people.”

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