The re/insurance industry has contributed significantly to building resilience to climate change, one of the biggest socio-economic threats faced globally, however, the successful transition to a low-carbon economy needs additional support and collaboration from third-party stakeholders to mitigate obstacles to overcoming the protection gap (disparity between economic and insured losses post-event).
Photo by the Guardian
The Geneva Association, an international insurance industry think tank, has called for a more coordinated approach between governments, policymakers, and standard setting bodies and regulators to address barriers to re/insurers’ upscaling cover of climate risks.
Dr. Maryam Golnaraghi, Director of The Geneva Association’s Extreme Events and Climate Risk research programme, said; “Failure to address climate change has been identified as one of the highest potential socioeconomic risks to our society.
“Building resilience to climate change requires proactive risk management and adaptation strategies, and transitioning to a low-carbon economy needs to align governments and the private sector.
“The insurance industry plays a crucial role in building resilience and fostering economic and entrepreneurial pathways that address climate change.”
Fragmented climate policy and regulatory frameworks are among key obstacles to providing climate cover, both insurers and reinsurers would benefit from a stable regulatory and political framework, as well as improved access to risk data on climate-related decarbonised critical infrastructure projects and an efficient market.
On the side of the re/insurance industry, the Geneva Association highlighted a need to institutionalise climate change as a core business issue, and collaborate with governments and other key stakeholders.
Anna Maria D’Hulster, Secretary General of The Geneva Association, said; “study participants reported initiatives in three aspects of the business: firstly, the liability side, where the industry already offers specialised risk transfer solutions that address the financial consequences of climate change; secondly, the investment side, where insurers increasingly integrate climate change considerations into their investment strategies; and thirdly, the operational side, where companies are reducing their carbon footprint.”
The Geneva Association survey stressed that governments and the insurance industry should explore ways for greater collaboration to support climate resilience and decarbonised critical infrastructure.
D’Hulster added that the study confirmed “climate change is a topic that has made its way up to the boardrooms of the insurance industry, although insurers are neither the polluters nor the policy setters,” and after 2017’s record setting loss year for natural catastrophes, 2018 will be prime time for all stakeholders in the climate resilience issue to renew efforts in up-scaling climate risk transfer.
