Rewriting the risk: Addressing the challenge of climate change
Our latest global report finds that the insurance industry has a central role in building wider understanding of climate-related risks and in mitigating against those risks.
Our latest global report finds that the insurance industry has a central role in building wider understanding about climate-related risks and in mitigating against those risks. It canvasses the views of insurance industry experts and citizens from a wide range of markets to explore four key issues:
- The impact of climate change on insurers
- How to mobilise insurance markets to mitigate climate risks
- Value chain risk arising from climate risk
- The growing trend of climate litigation risk.
Collaboration for change
Climate change presents a wide range of emerging risks which affect all businesses and households across all societies. The risk management approaches and underwriting practices of the global insurance industry are a major catalyst for managing those risks and driving positive change. However, (re)insurers cannot mitigate climate change alone. Collaboration between all actors, including governments, is vital.
The Intergovernmental Panel on Climate Change makes clear the time for action is now. To that end, the report outlines the climate action already being taken by (re)insurers. In addition, we look at what more the sector must do to make their own business value chains sustainable, and to help their clients to meet net zero.
The evidence of climate action being taken in many countries is deeply encouraging. However, it is clear that all sectors have an important role to play in achieving further and substantial emissions reductions. Addressing the challenges of climate change requires true innovation – in institutions and organisations; understanding and thought; technology and leadership. In turn, the right policies, infrastructure and regulatory landscape are required to enable business to help meet the targets.
Deborah Newberry, Corporate Affairs Director
The report sets out six strategic recommendations for (re)insurers to integrate into their own value chain, as well as encourage their corporate clients to adopt them, to help address climate risks and reduce the likelihood of environmental liability claims made against them:
The growth in sustainability and climate-related issues impacts on all types of insurance policies for the simple reason that climate risks are a constant, growing concern. From an underwriting perspective, changes in practice will be required to price climate risks more accurately in the future. (Re)insurers (and the businesses they insure) that are ahead of the transformation game, like those at the forefront of the industrial revolution and the move to a digital economy, are much more likely to succeed.
John Bruce, Partner
Insurance markets in numbers
The climate litigation landscape is already active, not least due to rising citizen demands for action. We are seeing a shift towards those individuals, NGOs and groups who want to agitate and make their views known. Forcing companies and government bodies to adhere to their sustainability policies and promises is set to become a growth area for future litigation. Whilst that is becoming a reality in some countries like Australia, the US and the UK, other jurisdictions should take heed.
Matt Andrews, Partner
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