CLIMATE RISK AND INSURANCE
Director: Walter Stahel
►About the CR+I Project
In May 2008, following a mandate from its members at the 2008 General Assembly, The Geneva Association began its climate change and insurance (CC+I) research project (renamed climate risk and insurance project - CR+I) in response to one of the most multi-faceted challenges to the insurance industry since its inception—climate risk. The project builds on the considerable expertise that The Geneva Association has acquired in this area over more than three decades through its activities as part of its ongoing Risk Management Research Programme.
As a result of the mandate, The Geneva Association established a working group of experts from a dozen of its Members, complemented by external experts from internationally renowned institutions. The CR+I Working Group is co-chaired by Kunio Ishihara, Chairman, Tokio Marine & Nichido Fire Insurance Company and Michael Butt, Chairman of Axis Capital Holdings and has embarked on a multi-year programme to study the links between climate risk and insurance.
The objectives of the climate-linked research have been to identify and analyse:
■ issues that are of specific relevance to the insurance industry, such as the likely range of future claims costs, new business opportunities and scenario testing;
■ external challenges to be addressed at the political, educational and social levels, such as the role of government, specific provisions concerning issues such as building codes, zoning restrictions, etc., to prevent repeated losses in hazardous regions.
The reports and activity produced by the research are aimed at three different audiences:
■ the insurance industry: to inform industry stakeholders widely about climate risk and its implications and support its clients' adaptation and mitigation measures;
■ governments, lawmakers and regulators: to inform all legislative and regulatory stakeholders on critical issues, show limitations and the need for regulatory and legislative support in the management of increased impacts on the industry;
■ the wider public: to raise awareness about the role of insurance and the limits of insurability and to improve perceptions of insurance.
The harnessing of market forces is likely to be one of the most effective ways of changing individual and corporate responses to climate risk. Initiatives from the insurance sector produce very significant progress in mitigation and adaptation measures, and are likely to continue to do so. The Geneva Association has therefore positioned its research:
■ to provide an overall industry understanding of climate risk in order to allow companies to better manage their own risk exposure and how to position climate risk in a holistic approach;
■ to provide and occupy common ground above and beyond the individual corporate interests such that a significant body of the insurance industry can act collectively, speak with one voice and engage external stakeholders as a credible force in this most serious challenge.
Thus, at the 2009 General Assembly in Kyoto, Japan and in the same room used for the signing of the Kyoto Protocol in December 1997, 56 of the world’s leading insurance companies signed up to The Geneva Association’s Kyoto Statement—a series of common commitments and undertakings on measures to adapt to and mitigate climate change. In particular, the Statement calls on governments to harness the industry’s particular skills and unique position in society to help society adapt to the impacts of climate change.
The presence of The Geneva Association’s CR+I working group at a side event at the United Nations Conference on Climate Change, Committee of the Parties (COP15) in December 2009 took the government and societal angle a stage further. It demonstrated that the insurance industry supports and can complement government action, proactively interacts with concerned parties and supports the notion that there is a need for mitigation and adaptation action now.
The CR+I project is a logical step in the development of the Risk Management research programme of The Geneva Association, which started with responses to external factors, such as risk engineering and the analyses of natural hazards, in the 1980s. The 1990s saw the inclusion of the challenge of sustainability, followed at the beginning of the 2000s by organisational and functional issues, such as the role of the Chief Risk Officer and solvency reforms in Europe and other regions.
The CR+I Project is directed by the Head of the Risk Management research programme, Walter R. Stahel. Visible results of the project are its publications (including the seminal report The insurance industry and climate change) and the CR+I Seminars which are open to a wider audience of experts from insurance, academia, research institutions and other relevant private sectors as well as policy-makers).
A key focus of The Geneva Association Climate Risk and Insurance Project (CR+I) has been to reach out to policy-makers and other stakeholders at the COP15 United Nations Climate Change Conference in Copenhagen. On 9 December 2009, a CR+I panel delivered a presentation to the attendees of the COP15 summit, calling on them to recognise and harness the skills of the insurance industry in national and international measures to mitigate and adapt to the effects of climate change.The following links provide access to the key documents and resources developed for the COP15 meeting.
Presentations from COP15 conference:
►Articles and documents of interest
- The 2nd Climate Change and Insurance Seminar "Climate Change: Opportunities for Latin American Insurers? 27-28 September 2010, Sao Paulo, Etudes et Dossiers no. 366, December 2010
- The Geneva Association's CC+I Project—International Contacts and Links
- Global insurance statement on adapting to climate change in developing countries,(also in Spanish, Japanese and Korean)
- The insurance industry and climate change (Geneva Report 2)
- Kyoto Statement of The Geneva Association
- Press presentation, 2 July 2009, London
- Matrix: This matrix (or map) which is meant as a guideline for the research economist when sorting out the existing information is proposed and submitted for discussion. Its objective is to ease the identification of well researched areas versus white spots on the map.
- Climate Change and Insurance: Invitation to Cool Earth 50, by Former Prime Minister of Japan Abe.
- "Cambio Climático y Seguros: Un Negocio entre la Negación y el Pánico — Climate Change and Insurance: Business Between Denial and Panic", Mercado Asegurador, Issue 353, September 2009.
- Michael Butt, Co-Chair of the Climate Change Working Group at The Geneva Association and Chairman of AXIS Capital explains why the global insurance industry must take a stand on climate change (Reactions, September 2009): View from the top and Time to act on climate change.