COP26: A recap of insurance-related news
A reminder of some of the key insurance-related announcements during the two weeks of COP26 talks
Several industry initiatives were launched as part of the event, including the Global Resilience Index Initiative (GRII). 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.
GRII was one of several Insurance Development Forum-backed initiatives launched over the two week event. The IDF also signed an agreement with the V20 group of ministers for vulnerable countries to create a Global Risk Modelling Alliance, a public-private partnership through which the industry will provide open-source technology and standards.
The IDF also 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 Prince of Wales’ Sustainable Markets Initiative Insurance Task Force unveiled a framework which aims to form the basis for new public-private partnerships to help boost disaster resilience in low to middle income countries. To pilot the framework, the SMI Insurance workstream said it was working with agencies in Kenya to develop means of bringing private sector resources to bear in support of more resilient agriculture across the country.
(Re)insurers and brokers will fall within a UK government initiative unveiled during COP26 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.
Lloyd’s also 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.
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.