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Panel talks financial solutions at climate summit

From left moderator Peter Giacone, with panellists Richard Dudley, Andrew MacFarlane, Vishaal Bhuyan, Ariane West, Darren Wolfberg, and Julia Henderson (Photograph by Jessie Moniz Hardy)

There is a big opportunity for the insurance industry in the arena of “speeding up transition” to a low carbon economy, said Richard Dudley, global head of climate strategy at Aon.

Mr Dudley was speaking as a panellist at the Bermuda Climate Summit 2022 in the Innovative Financial Solutions forum.

This panel highlighted some of the unique challenges of the reinsurance industry with respect to transition risk and focused on how the development of speciality financing products within the sector, sought to capture and track climate change risks throughout the life cycle of financing.

“We are trying to think through from the very top down, what do we think the role of our industry should be,” Mr Dudley said. “We have heard a little bit about it (speeding up transition) today, and the role our industry plays in risk financing, not just risk transfer.”

He used offshore wind farms as an example.

“There is not an offshore wind farm that I am aware of, anywhere in the world that has ever been constructed without it being insured first,” he said. “Think of us as an enabler of that transition.”

Mr Dudley said resiliency was also something to look at.

“Resiliency is really important because the climate is changing,” he said. “It has already changed, and it is going to change some more. How do we make sure that society is resilient to that?”

He said a lot of it has to do with natural hazards, which his industry spends a lot of time thinking about.

“But it is also an area where sometimes we are cautious,” he said. “That makes us more reticent to deploy capital.”

Panellist Andrew MacFarlane, head of climate, AXA XL, said in order for his company’s underwriters and risk consultants to be aware of the issues, they had to be trained and educated on what a potential transition looked like, and what that might mean to the areas of business and the products that they support.

Mr MacFarlane said his company is looking at the potential for carbon markets.

Carbon offsetting is a way to balance the environmental impact of CO2 emissions produced through different processes

“From a carbon perspective we are looking at carbon offset insurance,” he said.

Vishaal Bhuyan, co-founder and CEO of Aanika Biosciences, took a different approach saying they were using biology to address safety issues and ensure best practices.

“How do you ensure that ESG companies are sourcing ingredients in line with industry standards,” he said. “So there are coffee beans, cocoa or palm oil. How do we ensure that that is sustainable and that there is no food fraud, contamination or adulteration?”

His company tackles this by engineering microorganisms.

“We harness bacteria,” he said. “We have created essentially a tab that can be applied at the source of the product and then traced down through the supply chain. We are working with big food companies in the US.”

Other panellists included Ariane West, co-founder, chief operating officer and head of structured finance at Re2 Capital.

Ms West spoke on developing underwriting products intended to address climate related risks.

“As a team we tend to take the approach of looking at what are the problems out there that we can help create solutions to that – so we can arrive at a market driven incentive and really engage around risk management products that help to develop and really create solutions,” she said.

Darren Wolfberg, co founder and chief executive officer, Blockchain Triangle.

His company builds technology platforms that combine big data, and big data compliance information that comes from smart meters or IoT sensors, and connects it to blockchain.

“We do that for a couple of different reasons,” he said. “One is for the creation of digital securities or digital assets and the second is for compliance.”

Julia Henderson, president and head of portfolio management at Stable spoke on how her company provides risk management solutions to food manufacturers and food producers.

Founded in 2017, Stable uses reinsurance structures in Bermuda to support the hedge investments its customers enter into.

“We essentially act as an insurance policy for price rises or decreases,” Ms Henderson said. “I am a geek. I work with brilliant data scientists and commodity traders, and I come in with my insurance angle. What is beautiful about it is that someone designed this product who had nothing to do with insurance. I came in as we were building up a Bermuda strategy and then a reinsurance strategy. What is interesting is that the solution that was built was meant to encompass the entire business risk. It was very clean parametric price risk insurance. There was no coverage side exclusions, none of the stuff I had dealt with in my reinsurance days.”

The 2022 Bermuda Climate Summit was organised by the Bermuda Business Development Agency, and held at Rosewood Bermuda in Hamilton Parish. More than 150 people attended.

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Published May 30, 2022 at 8:00 am (Updated May 29, 2022 at 1:53 pm)

Panel talks financial solutions at climate summit

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