A new report has today been published by the global insurance industry group ClimateWise to help insurers play a more meaningful role in the decarbonisation of the world's economy.
Drawing on the expertise of more than 10 ClimateWise members, including Aon, Allianz, Aviva, AXA, Lloyds, Zurich, the report highlights nine key priority areas for insurance product innovation to support climate mitigation and adaptation.
It also explains how insurers can actively engage with supply chains and governments to help deliver a net-zero economy.
“The tangible impacts of climate change are being felt more deeply and seen more frequently than many expected,” said Dominic Christian, chair of ClimateWise and global chairman of reinsurance solutions at Aon.
“Although the insurance industry is changing, that rate of change must accelerate, and innovative climate products must be developed so that industry can both enhance resilience and facilitate the transition.
“We hope this new white paper will lead the way for greater collaboration within our industry and with external decision makers to support the urgent need to tackle climate change.”
The nine key priority areas for insurance product innovation highlighted in the report include:
1) Implementing environmentally-sustainable claims servicing
2) Enabling capital flows towards green solutions through risk transfer solutions
3) Creating removal-based carbon offsets through natural capital protection
4) Scaling emerging and existing low-carbon and net-negative technologies and start-ups
5) Supporting the sustainable decommissioning of carbon-intensive assets
6) Developing risk advisory services to support clients’ climate mitigation understanding and approach
7) Enabling and incentivising low-carbon choices
8) Mainstreaming the encouragement of climate mitigation through efficient and resilient reinstatement
9) Developing solutions for increasing climate legal liability and environmental litigation.
The report also includes recommendations to address barriers to innovation and foster greater collaboration, such as expanding the role of government and developing a more coordinated value chain.
“The entire insurance value chain – from modelling firms to loss adjustors, brokers to legal advisors – all hold pieces of the puzzle, and innovation will be needed in all areas,” said Lucy Stanbrough, chair of ClimateWise's managing committee and head of emerging risks at Willis Towers Watson's Willis Research Network.
“From risk services that help reduce transition risks for clients, to the creation of incentives towards a lower-carbon economy through the insurance products it offers to customers, the transition presents an opportunity to build a better business for the industry’s clients in the future.”
Image credit: iStock
Author: Chris Seekings