In the quest for a more sustainable future, the insurance industry is stepping up to play a vital role in supporting the development of the blue economy, according to a recent Swiss Re Institute report.
As waterways and oceans continue to be recognised as crucial resources for life on Earth and the global economy, insurance solutions are emerging as a means to transfer and absorb the risks associated with sustainable aquatic development.
The International Finance Corporation (IFC) has defined “blue finance” as the use of financial instruments, including insurance, to promote the sustainable utilisation of marine and freshwater resources.
Aligned with the United Nations’ Sustainable Development Goals (SDGs), blue finance aims to fund the blue economy while reducing carbon emissions, pollution, and biodiversity loss.
China, which has set ambitious goals for green and sustainable economic development, has embraced the concept of blue finance.
The Chinese context serves as a foundation for identifying the significant risks involved in ocean and freshwater projects, such as natural disasters, environmental pollution, regulatory requirements, and evolving customer behaviour.
To address these risks, insurers are offering a range of coverage options. Traditional covers, including property, engineering, and environmental impairment liability insurance, can protect sustainable plastic production facilities and offshore renewable energy projects.
Additionally, insurers are exploring innovative solutions like production liability, agricultural, marine, and business interruption covers.
As the blue economy expands, new risk pools are expected to emerge. For instance, marine carbon sink index insurance and nature-based insurance solutions are being explored to safeguard marine ecosystems.
The evolving landscape of energy and carbon capture technologies presents opportunities for advanced risk transfer solutions. Insurers are anticipated to focus on product design, cooperation models, and risk management services to meet the growing demand for risk protection.
Moreover, insurers are looking to establish cross-sector collaborations with a focus on “insurance + services” and “insurance + financial loans” business models.
By working closely with public sector entities and corporate stakeholders, insurers can contribute to the sustainable development of the blue economy.
Integration of available financial resources and services will enable insurers to offer comprehensive support.
