The Geneva Association has released a new report saying that insurers and reinsurers are now investing heavily in combatting nature degradation and biodiversity loss.
The report, Nature and the Insurance industry: Taking Action towards a Nation-Positive Economy, says that by taking action now, re/insurers can help reduce nature-related risks and incentivise the shift towards more sustainable business models – both of which will be integral to the transition to a nature-positive, net-zero and more resilient economy.
The Geneva Association’s report presents concrete ways that re/insurers are enabling sustainable business models in various nature-dependent sectors by preserving natural capital through underwriting and investing in nature-based solutions.
Maryam Golnaraghi, director for climate change and the environment at The Geneva Association, authored the report.
She said: “Re/insurers are taking nature degradation and risks seriously and have started to invest in research, raise awareness and roll out innovative solutions. However, the industry needs to better understand the materiality of these risks. Also, the large-scale deployment of new climate technologies for decarbonisation come with potentially serious environmental impacts, which need to be managed with a full life cycle view. Re/insurers are well-placed to share their risk expertise and incentivise more sustainable behaviours.”
The sixty-four-page report says that for the past 30 years, re/insurers have provided leadership in natural catastrophe (NatCat) risk modelling and pricing; conducting research on, raising awareness of and promoting risk reduction and preventive measures; and offering risk transfer solutions to build societal resilience to extreme events.
It then goes on to list six messages that it says are key for insurers:
- The association predicts a paradigm shift in the societal perception of large-scale, nature-related risks is anticipated in the coming years. It says that it expects these risks to become a major driver of future socio-economic development and core business decision-making. It also predicts more applied research that quantifies the benefits of nature-positive activities for addressing climate change, establishes best practices for assessing the risks of nature and biodiversity loss, and evaluates the impact of mitigation actions required to encourage meaningful action at scale and attract more coordinated and aligned funding.
- That reinsurers could experience nature-related risks through the channels of societal vulnerability to climate risk, disease transmission, health issues, and pandemics; impacts on insureds and investees with unsustainable models and supply chains; the secondary impacts of unsustainable government developmental approaches; and a reduction in green house sequestration.
- The impact of those risks on the (re)insurance industry.
- The need for innovative insurance products and services, aligned with strategies that account for the links between climate change and nature.
- Establishing a demand for and supply of insurance products that look to protect nature-based systems.
- Putting nature-positive activities and resilience building at the centre of a sustainable economy.