A recap of the main insurance-related news from the first week of COP26 discussions in Glasgow
Lloyd’s has detailed its plans to introduce a measurement framework to monitor syndicates’ carbon underwriting. Lloyd’s chairman Bruce Carnegie-Brown told The Insurer TV that the framework to measure progress towards net zero is expected to be put out to the market in the coming months, The framework will be piloted by managing agents in 2022, before being refined and scaled up in 2023.
(Re)insurers and brokers will fall within a UK government initiative unveiled this week which requires UK financial institutions and listed companies to publish net zero transition plans that detail how they will adapt and decarbonise as the UK moves towards a net zero economy by 2050.
The Insurance Development Forum (IDF) has partnered with the Start Network coalition of humanitarian charities to launch a new service providing ex-ante funding for escalating climate-related risks. The Start Ready financing facility will provide pre-agreed funding for risks such as drought, flooding and headwaves, based on pre-agreed triggers, with RenaissanceRe providing technical risk modelling expertise.
The IDF also signed an agreement with the V20 group of ministers for vulnerable countries to create a Global Risk Modelling Alliance (GRMA). This public-private partnership will see the industry provide open-source technology and standards, a “public good fund” to help countries fill model and data gaps and a technical assistance team, partly funded by the insurance team, to work with countries on applied projects.
The IDF also confirmed the establishment of the multi-partner Global Resilience Index Initiative (GRII), which is set for a formal launch next Monday. Partially funded by the insurance sector, the initiative intends to provide a globally consistent model for the assessment of resilience across all sectors and geographies, curated on an open-source basis.
The InsuResilience Global Partnership formally launched its Strategic Evidence Roadmap at the COP26 talks in Glasgow, which is aiming to grow the reach and effectiveness of insurance and risk financing solutions as a disaster management tool. The roadmap is aiming to collect evidence around what works in climate and disaster risk finance and insurance as part of a drive to unlock the potential that insurance can bring for those exposed to natural disasters in vulnerable countries.
Aviva, Axa and Scor are among more than 30 major financial institutions that have promised to end investment in agricultural commodity-driven activities linked to deforestation by 2025. In one of several initiatives unveiled at COP26 to tackle deforestation, financial institutions representing $8.7trn in assets have committed to assess their investment exposure to deforestation risk by the end of next year. This will focus on agricultural commodities – palm oil, soy, beef and leather, pulp and paper – that are thought to be tied to the most significant deforestation impacts.
BPL Global has been named as broker the Green Guarantee Company (GGC), a newly launched company that will guarantee climate bonds issued on the London Stock Exchange. GGC has been funded by the Development Guarantee Group, which is backed by incubator and fund manager Carbano Development, with Sovereign Risk Insurance and Liberty Specialty Markets serving as its lead insurance partners. Ascot and Aspen are also serving as insurance partners for the new entity.
Allianz has agreed a partnership with the World Bank’s International Finance Corporation to launch a platform for climate smart-investment that will provide up to $3bn for private enterprises in developing economies. Investor contributions will be combined with IFC funds to scale up climate-responsible financing in developing economies.
The Net Zero Insurance Alliance has announced plans to target brokers and industry associations as it moves to expand its membership. The NZIA said it is working on a standard to disclose global emissions by the summer of next year, with its target setting protocol planned to launch by January 2023. Members would then be expected to publish their first interim targets within six months of that date.
Pool Re has partnered with the International Forum of Terrorism Risk (Re) Insurance Pools and the National Consortium for the Study of Terrorism and Responses to Terrorism to generate new reports considering the impact climate change has on what drives terrorism. The reports will examine current and contemporary threats along with global regional outlooks, and will also provide possible actions and recommendations of how to mitigate the risk. These actions will be presented at the IFTRIP’s next meeting in May 2022.