This week’s discussions at COP26 have positioned finance – and within that insurance – as the key lever that can help facilitate the transition towards a decarbonised, climate-resilient world.
Government commitments may not be as robust as would ideally be the case, but the growing momentum within the private sector, coupled with rising public awareness of the need to act, creates a platform on which societal transformation can begin to take place.
Over recent days the important role the industry can play in building resilience has been a recurring theme within several discussions this week, and is now widely recognised within the public sector.
As Eric Usher, who heads the UN Environment Programme Finance Initiative, said this week, insurance has a pivotal role to play.
“The insurance industry plays a three-part role as risk managers, insurers and investors which uniquely positions the industry to help support the building of climate-resilient economies,” he said.
Scaling up the wide ranging initiatives which have been launched to build societal resilience remains a challenge, but the creation of tools such as the Global Risk Modelling Alliance, launched by the Insurance Development Forum earlier this week, will help facilitate this process.
On Monday, the COP26 presidency programme will focus on addressing loss and damage - an area that sits at the heart of the insurance industry’s expertise.
In vulnerable countries, where insurance is not prevalent, extreme events can set back development and reinforce poverty. Support for risk pooling and transfer mechanisms has long been held by these countries and has been a feature of UN Framework Convention on Climate Change talks for two decades.
While insurance is unlikely to prove a solution for slow onset events, such as sea level rise, it has a vital role to provide in helping manage the risk of extreme events (as well as reducing that risk through helping facilitate adaptation action).
Look out for Monday’s edition of The Insurer’s COP26 daily bulletin which will provide an update on some of the key discussions of the day.
In today’s news we report on an €18mn commitment from the German government to help establish a Premium Support Facility for African governments and humanitarian agencies wishing to purchase climate-related insurance through African Risk Capacity.
Today has also seen the launch of Axa XL’s coastal risk index, a tool created to integrate the protective benefits of coastal ecosystems into insurance risk models.
We also round up some of the key developments from an insurance perspective of the first week of discussions in Glasgow.