Denial is no longer an option: how re/insurers must tackle climate change
Winter has arrived in the Northern hemisphere, bringing with it its usual scattering of snow in some places and ice in others. However, as some of us shiver it’s worth remembering that it has been a hot year in many places.
In Europe this year the mercury hit 46 degrees Centigrade, with heat exhaustion and other factors killing almost 900 people across France and Belgium, along with thousands of farm animals. In the US the California wildfire season was another highly active that it is not yet over. In Australia, at the time of writing, the temperature around Sydney is set to hit more than 45 degrees Centigrade.
Global climate change is a fact of life for the re/insurance industry and there is no room for denial of the science involved in this.
As a part of Bermuda:Re+ILS’s ongoing series of articles based on readers’ answers to a survey we sent out in December, we asked the question ‘What role does the re/insurance industry have to play in addressing climate change?’ Readers could pick multiple options to answer this.
The most commonly highlighted answer on the survey was ‘Develop products to mitigate the impact of climate change for clients’, which was chosen by 82 percent of readers.
Standard and Poor’s highlighted what might be done in this area in a report. The report, “Sink Or Swim: The Importance Of Adaptation Projects Rises With Climate Risks”, looks at the growing recognition of the value of adaptation projects.
These projects aim to strengthen the resilience of buildings, flood defences, critical infrastructure, and communities against the risks of climate change. ( https://www.bermudareinsurancemagazine.com/news/climate-risks-highlight-value-of-adaptation-projects-finds-report-5290)
Also this year, RenaissanceRe sponsored the Climate Change: Response and Resilience Leadership Forum at Columbia University in New York City in November.
The event, hosted in conjunction with Columbia University’s Earth Institute, brings together government and business leaders with scientific and environmental experts, to look for climate risk mitigation techniques and support efforts to reduce the economic turmoil following disasters. ( https://www.bermudareinsurancemagazine.com/news/renre-sponsors-climate-change-forum-in-new-york-5275)
The second most popular option on the survey was ‘Pressure carbon polluters by refusing to do business with them’, which was chosen by 64 percent of readers.
Companies such as AXA have already started to follow this strategy. In November AXA unveiled its new climate strategy, tightening its policy towards coal and launching transition bonds to facilitate the decarbonisation of the group. AXA vowed to complete its divestment from the coal industry by 2030 in Europe and the OECD, and by 2040 in the rest of the world. ( https://www.bermudareinsurancemagazine.com/news/axa-vows-to-fully-divest-from-the-coal-industry-by-2040-5284)
Third on the list was the 55 percent of readers who chose the option of ‘Lead the debate in driving for political action to tackle climate change’. With activists such as Greta Thunberg playing an increasingly visible part in calling for political action on global climate change, there should be ample room here for leadership on the part of the re/insurance industry.
The option ‘Set a good example by complying with climate change regulation’, however, was voted for by just 36 percent of readers.
