General Insurance Article - The Wave is Coming for Climate Action


Aon recently hosted a panel debate titled ‘Managing an evolving climate’ as part of its Virtual Reinsurance Renewal Season fireside chats.

 The goal of Aon’s fireside chats is to stimulate insightful debate that serves to address key areas of client need: navigating new forms of volatility, building a resilient workforce, rethinking access to capital, and addressing the underserved.

 The panel, comprising Dr. Bronwyn Claire, Senior Programme Manager, ClimateWise; Maria Rapin, Chief Executive Officer, Nephila Climate; Mark Sait, Chief Executive Officer, SaveMoneyCutCarbon, and hosted by Dominic Christian, Global Chairman of Aon’s Reinsurance Solutions, agreed that interest in mitigating climate change was growing across various stakeholder communities.

 Dr. Claire said: “The [insurance] market right now is really looking for some guidance on where it can add products and where it can innovate. We can see the industry supports Net Zero, but we don’t know which buttons to press.”

 Dr. Claire added that industry momentum was building towards climate action, and that the demand from insurance executives to learn more about the impact of climate change had ‘skyrocketed’, with a view to changing business models and upskilling underwriters and relationship managers.

 “There’s definitely demand,” she added. “It’s not necessarily always trickling into actions… but the wave is coming.”

 Sait highlighted that consideration had to be given to how to communicate to businesses, governments, and individuals when promoting decarbonization initiatives, and that since consumers and businesses by default trust their insurer, the insurance industry could use its voice beyond just offering insurance products.

 “Government, boardrooms have to understand that not everybody [understands] carbon,” he said “But they understand saving money. So I think that’s the starting point.”

 Sait added that there was no “go-to brand” providing practical ways to mitigate climate change, adding that behavior would be changed through “smart marketing” as much as through technology and science.

 “That’s what moves millions of people; that’s what gets conversions going. It’s about addressing the audience in the right way; it’s not about jargon or being too techy, not many people know how a heat pump works. Consumers are saying ‘you don’t need to keep scaring me’; I get it; tell me more about what I need to do as a business, as a home; help me with the doing bit,” he said.

 Rapin said that investor interest in climate change was increasing, and that compulsory disclosures mandated by governments would increase momentum towards greener investments.

 “That compulsory element for purchasing risk protection hasn’t been there so far on the climate side, even though we know the risk is out there and it exists,” she said. That’s starting to change in the regulatory environment, but also as there’s more pressure from investors, shareholders, stakeholders to do something.”

 Rapin added that Nephila Climate was helping investors to understand the impact of climate change on their portfolios, and that the conversations were ‘getting deeper and more interesting’.

 The panel agreed that the 26th United Nations Climate Change Conference (COP26), which began on October 31 in Glasgow in the United Kingdom, would be a positive motivator for climate change action.

 “The benefits and merits from it are just the profile that it creates for the subject matter. I think it will speed up investment into businesses like us, which are creating new marketplaces, making it easy for the customer to engage, to change their behavior; we need meaningful investment to scale now, to make a real difference, and equally important is the funds that are needed for longer term science and technology development, hydrogen, mini nuclear, carbon capture, batteries that will ultimately be the solution to help the plants,” Sait said.

 Rapin added that COP26 would “turbocharge" the momentum of the insurance industry to embrace ESG and develop initiatives to counter climate change.

 Dr. Claire added: “The majority is proactively leaning-in and I have definitely seen a stronger voice for insurance in the conversation”, highlighting that insurers were a ‘great resource’ for policyholders in advising on ways to mitigate climate change.
  

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