(Top) Swenja Surminski (Chair), Managing Director Climate & Sustainability, Marsh McLennan; Professor in Practice, Grantham Research Institute on Climate Change & the Environment, London School of Economics and Political Science (LSE); Emma Howard Boyd, Chair, Green Finance Institute; Veronica Scotti, Chairperson, Public Sector Solutions, Swiss Re; Steve Mennill, Senior VP & Chief Climate Officer, Canada Mortgage & Housing Corporation; Mark Way, Head Sustainability Underwriting, Zurich North America.
The second panel focused on the future insurability of physical climate risks and how resilience building and risk prevention will be key to maintaining insurance accessibility and affordability.
Climate change has implications for economic growth, and recognition is growing that climate mitigation and adaptation are urgent matters of national security and critical to business. Radical, proactive collaboration is needed to make quick and wide-reaching changes. Governments must share data across borders and learn from other geographies on the front line of climate risk. Data is key: the value of protecting nature needs quantifying in terms that financiers will understand. A unified way of measuring impact is needed to ensure that investment in nature-based resilience is maximised. Many governments, especially in North America, are absorbing too much climate change-related financial risk by reactively compensating for disaster losses. They need to proactively move towards a market-based solution by pricing physical risk into financial decisions made by property owners and developers. This will help curb the concentration of assets in high-risk areas, reduce moral hazard and promote the insurability of risk.
Implications for insurers:
- The insurance industry must mobilise international finance in order to tackle protection gaps.
- Insurers need to design adaptation-centred policies to both absorb and reduce environmental risk, while providing holistic benefits to communities and ecosystems.
- Insurance companies, local and national governments, regulators, businesses andthe finance industry must collaborate to scale up community-level successes.