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Munich Re aims to push boundaries of climate insurability, say leaders

23rd September 2022 - Author: Matt Sheehan

Executives at Munich Re say the company is aiming to “push the boundaries of insurability” in its efforts to help understand and mitigate the impacts of climate change.

Speaking at a briefing during the 2022 RVS event in Monte Carlo last week, leaders at the German reinsurance company said they see the potential for a significant business opportunity as businesses transition towards climate neutrality.

They pointed towards an “investment surge” indicated by IEA figures, which show that global investment in renewable energies for the generation of electrical power alone would need to triple from 2022 onwards to around $1,300 billion annually by 2030 for the objective of net-zero carbon neutrality to be met before 2050.

“But this is rather what needs to happen,” said Thomas Blunck, Member of the Board of Management of Munich Re. “We’re not sure it’s going to happen. It’s not a forecast of what we really expect.”

“That means we need to help and facilitate wherever to make that possible,” he told attendees at the conference in Monaco. “And this is what we do with enabling and investing. We have products that allow to mitigate the risk of new technologies and we have a team focused especially on the renewable technologies.”

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To this end, Munich Re has developed product and performance guarantees that aim to mitigate risks for climate projects, the newest of which is a guarantee for green hydrogen energy production called HySure that is currently in pilot stage but could eventually supply a green hydrogen market worth up to $10,000 billion by 2050.

“Product performance, product reliability is something investors are not good at assessing,” Blunck explained. “It doesn’t match their risk appetite. By carving those risks out, we match the risk appetite of those investors in a much better way. And we extend the basis of who is willing to invest. Investors, including for example, pension funds, are then more willing to invest into renewable energy.”

“Our product and performance guarantee mitigates those risks heavily and creates the aforementioned long term benefits for the stakeholders,” he continued. “HySure is therefore another good example of how we tried to push the boundaries of insurability and bankability, made a business opportunity and hopefully also have to mitigate the risk of climate change.”

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