“Insurance exists to protect that which we cannot afford to lose, and when it comes to climate change, we all have a lot to protect,” suggests Greg Case, CEO of Aon.
In a report focusing on the role of the industry in fighting climate change, Case noted that collaboration between public, private and societal forces is essential to success.
He added, “We are living in a time that has been deemed “The Great Volatility” by the world’s leading economists, and there is no greater volatility we face collectively than the impacts of climate change.
“Mitigating, and in some cases adapting to climate change is one of the biggest challenges we face.”
According to Case, Aon has long been developing partnerships across the industry to advance climate solutions and close the protection gap.
He continued, “Our recent work with the International Federation of Red Cross and Red Crescent Societies to create the Disaster Response Emergency Fund (DREF), which provides emergency funding for communities in all kinds of disasters when needs exceed resources, illustrates this commitment.”
The firm’s President, Eric Andersen, added, “Big problems need to be solved by collaboration and this has been exactly that — humanitarian, private and public sectors partnering to prove that solutions can be found together.”
Case cited the fact that catastrophes and natural disasters in 2022 amounted to economic losses of $313 billion, $299 billion of which was the result of weather and climate events.
“That’s a staggering amount of loss, and yet, only 42% were covered by insurance. This data highlights a tremendous opportunity to close this protection gap. In doing so, we can protect vulnerable communities and strengthen the economy,” he said.
Case also highlighted three risks that Aon often hears from its clients that could hold companies back from taking a leading role in solving the climate crisis.
He noted, “They are telling us the industry continues to leave the playing field by excluding climate-related triggers and exiting challenged geographies; tax the net-zero transition by opting out of entire sectors and inadvertently making the transition to clean energy harder; and ignoring the accelerators by moving too slowly on adjacent markets.”
However, there is some light at the end of the tunnel, As Case also cited examples of where the industry has forged a better path by choosing to stay in the game, facilitate a just transition, and provide ways to bring new solutions to market more rapidly.
Case said, “catastrophe bonds were created to provide post-event cover for traditional risks, but they also encourage pre-investment in research and development that would accelerate clean energy transitions by assuring certainty of funds to deal with the impact of traditional claims.
“In another case, we have developed an industry-leading capability to enable a company to accurately value its intellectual property, and then use it as an asset to finance growth. This allows them to bypass traditional funding and accelerate their time to market. For many green technology companies, this is becoming their best option.”
He concluded, “We believe in our collective ability to address one of the greatest challenges of our times in a way that will better serve our clients and society as well.
“Aon’s role continues to be working with our clients to help them build physical resilience, accelerate solutions to market and de-risk climate-related investments — connecting capital to opportunities.”