Insurance solutions for climate change
The concern that world leaders are unable to come together to agree on, and resolve, the earth’s climate change challenges has been somewhat mitigated during the UN Climate Change Conference (COP26) in Glasgow by other groups, including the (re)insurance industry.
A formal partnership in risk understanding has just been announced by the Insurance Development Forum (IDF) and the V20 Group of Finance Ministers to build global resilience to climate risk.
It is included in three major programmes to connect the insurance sector’s world-leading risk-assessment capability to the challenges of combating the negative affects of planetary changes. They are:
1. Using typical insurance-based tools and analytics to help countries to better understand their own risks, together with funding and technical expertise to create projects to address them.
2. The establishment of the Global Resilience Index Initiative, a globally consistent model for the assessment of resilience across all sectors and geographies. It will be a curated, open-source resource offering high-level metrics across the built environment, infrastructure, agriculture and societal exposures, with many potential applications in aggregated risk management worldwide.
3. Further IDF support for the Start Network, and the new Start Ready, which aims to help communities get ahead of escalating climate risks.
Bermuda-based Renaissance Re has been a long-time member of IDF and its group chief risk officer, Ian Branagan, is co-chairman of the forum’s Risk Modelling Working Group.
He said: “The ability to quantify, prioritise and price climate risk is an indispensable foundation for sovereign risk strategies. Improved risk analysis and understanding in V20 countries opens the door to resilient investment and can reduce the burden on governments by transferring risks to capital and insurance markets that have the capacity and expertise to better bear them.
“It also enhances risk management, disaster preparedness and crisis response programmes which prioritise early action and protect vulnerable populations.”
Formed in 2015, the V20 Group of Finance Ministers is a dedicated co-operation initiative of economies systematically vulnerable to climate change.
The Insurance Development Forum is a public-private partnership led by the insurance industry and supported by international organisations, including the United Nations and the World Bank.
Denis Duverne, chairman of the IDF and of the AXA Group, said: “As an industry, we have consistently recognised that climate change is the biggest challenge of our time.
“A fundamental pillar of addressing it will be greater access to climate risk information, tools and standards, as well as benchmark metrics that will shed light on the climate risks of today and on future impacts.
“We are proud to work with the V20 for the GRMA, and with our partners in the GRII, to drive a major step-change in the effort to open up access to climate risk understanding.
“The announcements made today are testament to the power that collective action can have in the effort to build resilience to climate change.
“IDF members are committing funds, technology and expertise to provide tangible benefits to countries and populations vulnerable to climate change.
“This will be a crucial support to resilience and adaptation efforts and ultimately it will define what a climate-resilient future must look like.”