Aviva, Axis and Munich Re are the only major (re)insurers that write more direct premiums for renewable energy than fossil fuel infrastructure, according to a new report by Insure Our Future, which slammed industry-wide underwriting of fossil fuels as “economically dubious”.
Generali, Allianz and Zurich have topped the 2024 scorecard by Insure Our Future for implementing the most comprehensive fossil fuel underwriting restrictions across 30 global (re)insurers.
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Welcome to this month's edition of Sustainable Insurer, your monthly digest covering supply dynamics, pricing and loss trends, emerging risk threats, market penetration, potential public-private initiatives for cyber cat and a host of other areas.
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Road to Net Zero
Tokio Marine Group has announced that it achieved carbon neutrality across its overall business activities in FY23 for the 11th eleventh consecutive year.
Zurich has set an interim target to reduce the intensity of insurance-associated emissions in its large corporate customer portfolio by 20 percent between 2022 and 2030.
The Lloyd’s Market Association (LMA) and the International Underwriting Association (IUA) have partnered to launch a new data standard for underwriters when collecting sustainability data from clients.
(Re)insurers have been recommended to disclose their exposure to sectors with material nature-related risks and to sensitive locations, stated either as a percentage of GWP or as total sums insured, in the final guidance issued by the Task Force on Nature-Related Financial Disclosures (TNFD).
Broker Aon has developed a bespoke insurance product to cover the risk of reservoir integrity in carbon capture and storage projects.
CFC has expanded its carbon insurance solutions suite to offer carbon cancellation insurance against the risk that a carbon credit is cancelled or invalidated.
Gallagher Specialty has introduced a carbon insurance solutions service to help clients mitigate risks associated with decarbonisation initiatives.
More than one-third of brokers have developed a plan to achieve net-zero emissions or are already implementing one, according to new research by Aviva, with those yet to do so citing cost as the most significant barrier.
With several carbon insurance products announced in recent months, distinct product offerings are beginning to take shape.
Members of the Poseidon Principles for Marine Insurance (PPMI) have unanimously agreed to align with the International Maritime Organization (IMO)’s revised target to achieve net-zero by 2050.
Climate activists have disrupted the British Insurance Brokers' Association’s (Biba) annual conference in Manchester, urging the sector to stop (re)insuring oil and gas projects such as the East African Crude Oil Pipeline (EACOP).
Aon has developed an insurance product for international transport and storage companies engaged in carbon capture and storage (CCS).
Oka has entered an agreement with carbon solutions platform Clima in a deal which will extend the carbon credit insurance start-up’s offering in Australia.
A recent flurry of activity in the carbon credit insurance market has presaged the next stage in the evolution of the voluntary carbon market (VCM), according to Oka CEO Chris Slater, although it remains far off the ability to develop tailored coverage by developer, country or project type due to the lack of capital investment at scale.
Axa has topped a ranking of 29 global P&C insurers for underwriting and investment policies across climate, biodiversity and social issues, with nonprofit ShareAction slamming Lloyd’s managing agents’ performance as “particularly poor”.
Environmental campaign group Insure Our Future has called on AIG, Tokio Marine and Hiscox to follow in the footsteps of Zurich by introducing underwriting restrictions on new oil and gas extraction, including the expansion of metallurgical coal projects.
Zurich is set to introduce fresh fossil fuel restrictions that will see the Mario Greco-led carrier cease underwriting new oil and gas extraction, as well as the expansion of metallurgical coal, projects in what would be a major shift in policy.
Lloyd’s has concluded the consultation on the Corporation’s roadmap for insuring the low-carbon transition over the next three years and is now looking to finalise the roadmap to provide support to underwriting and product development.
Switzerland-based start-up CarbonPool has set out plans to establish a fully fledged carrier that uses carbon as its balance sheet.
Tokio Marine Holdings has revised the underwriting, investment and financing policies within its group climate strategy to potentially exclude 60 companies in heavy-emitting sectors if they do not provide a transition plan.
People Moves
Viewpoint
Art has often been seen as a mirror of society, reflecting the identity, values, and history of the culture from which it emerges. The art market more widely has also been praised as an early mover in the discussion and promotion of diversity, equality and inclusion.
Aon has marked the end of an 18-month certification process with the launch of its Florida Flood v3.0 model at a time of great opportunity in the US flood insurance space. Sustainable Insurer talks to Dan Rees, director of US flood model development at Aon, to find out the motivations behind the updated model.
Nick Evans, Aviva’s deputy head of renewable energy, outlines the issues in obsolete technology in the wind sector, and how insurers can look to underwrite complex life extensions.
Yokahu’s Tim McCosh calls on governments to issue a legal mandate to the (re)insurance sector to produce the innovation required for faster, more impactful action on the ground to improve resilience to climate change where it is most needed…
From getting a full view of climate risk to generating meaningful insight that businesses can use to build resilience, WTW’s climate practice head Peter Carter looks at the climate risk quantification obstacles that need to be overcome.
Lorenzo Chan on the importance of reaching those currently underserved by insurance.
EY’s Julie Eichenseer on why it is still possible for insurers to operate successfully in catastrophe-prone markets.
With key climate milestones rapidly approaching, the energy transition is at the forefront of many oil and gas companies’ minds, as they continue investing in carbon capture and storage (CCS) projects to abate their emissions. Between 2022 and 2023, the number of CCS projects in construction and development increased by 57 percent.
Amir Sethu, head of sustainability at MS Amlin, outlines how the Lloyd’s market can help mobilise investment in environmental conservation through debt-for-nature swaps, but warns that success depends on cross-sector collaboration.
As the risks associated with climate change worsen, the need for the transition has become unavoidable. The imperative to transition to cleaner energy has been further compounded by geopolitical events, with the Russo-Ukrainian War sparking the first truly global energy crisis, according to the International Energy Agency.
Miqdaad Versi, partner at Oxbow Partners, discusses the opportunity offered by the nascent carbon credit insurance market, with projections that the addressable market could reach more than $1trn by 2050.
The insurance industry plays a crucial role in helping individuals, businesses and governments adapt to and mitigate climate change impacts, and in enabling the transition from brown to green energy. Liz Henderson, global head of climate risk advisory at Aon, outlines the growth opportunities and risks.
Gallagher Specialty’s James Bosley outlines why insurance is critical to fulfilling the ambitious energy transition commitments unveiled at COP28.
COP28, the world’s largest ever climate conference, generated a blizzard of headlines and announcements, not to mention robust debate – for example, the exchange between Hillary Clinton and David Howden over the availability of climate risk insurance in the Global South.
It is often argued that insurers can manage climate change risk simply by using the annual policy cycle to reprice and rebalance portfolios. WTW’s Cameron Rye considers what happens if the rate of change is too fast…
Elliot Minton, underwriting manager at Liberty Specialty Markets, underlines the barriers and opportunities in insuring the low-carbon transition.
Ofir Eyal, partner and director at Marakon, outlines how the insurance sector can harness its unique capabilities to facilitate the low-carbon transition across the real economy.
Jan Pagan, specialist risk control engineer at Markel, explains how extreme temperatures could affect the renewable energy sector and what insurers should assess when it comes to insuring new and existing energy projects.
Markus Gesmann and Quentin Moore examine the growing activity around ESG in the Lloyd’s market.
Environmental activist Lindsay Keenan argues Lloyd’s has an opportunity this month to remedy ESG shortcomings
The Insurer TV
Technological developments will help advance the energy transition over the coming years regardless of curveballs thrown by macroeconomic and geopolitical issues, according to Swiss Re’s specialty CUO Anne Lohbeck.
Expanding the frontier of ILS beyond its traditional focus on the natural catastrophe space is at the forefront of the sector’s agenda as realisation builds of the need for innovative solutions to address the evolving risk landscape.
One of the key aims of Lloyd’s sustainability strategy has been to drive an increase in the amount of renewable energy business underwritten through the market.
Premier David Burt of Bermuda made a notable appearance at COP28 in Dubai, shedding light on Bermuda's role in climate finance and its commitment to tackling climate change.
Insuring the transition presents an immeasurable premium and revenue opportunity for the sector, according to Sherif Zakhary, CEO of Aon's Strategy and Technology Group (STG).
The future of the Net-Zero Insurance Alliance (NZIA) is hanging in the balance having lost more than half its members following the intervention from a “deeply irresponsible” group of US Republicans citing antitrust concerns.
The “journey” from the science to cat models has never been more critical, according to Aon’s Liz Henderson, as the industry continues to struggle to keep up with the pace of climate change.
Climate campaign group Reclaim Finance has called on Lloyd’s to “stop greenwashing” and to mandate stricter policies around the exclusion of fossil fuels to achieve meaningful change in a new report which ranks the fossil fuel underwriting policies of managing agents.
Ukrainian politician Maria Mezentseva has told The Insurer TV that Ukraine will become a “great opportunity” when the war with Russia is over, which she anticipates will happen by the end of this year.
The UK’s Business Resilience Task Force is seeking additional partners as it looks to expand its influence to further build resilience both in Britain and internationally, according to Guy Carpenter’s Julian Enoizi.
The groundbreaking community-based parametric scheme set up to provide emergency funding to New York neighbourhoods impacted by flooding has potential to scale up to cover thousands of cities across the US, according to Guy Carpenter’s Julian Enoizi.
Climate events and social justice have dominated headlines in recent years, with the understanding and prioritisation of these issues only increasing.
This year has been one of significant momentum for the (re)insurance markets in relation to ESG, with the industry markedly increasing its focus on assessing risk through an ESG lens.
Lloyd’s chairman Bruce Carnegie-Brown has said the (re)insurance sector could better utilise its role as an institutional investor to support green growth in the global economy but said regulatory changes will be needed if it is to use its assets to their full potential.
Canada’s former prime minister has said the global (re)insurance industry has a critical role in speaking “truth to power” when it comes to tackling the impact of climate change because of its investment in data, models and analytics to understand cat risk.
Too heavy a focus on national net-zero strategies and a lack of transparency around how global environmental goals are to be achieved could lead to a spike in emissions, Canada’s former prime minister Stephen Harper has warned, adding that existing targets are “unachievable” in their current form.
The Bank of England’s climate stress test is a sign that central banks and international regulators are looking to “ramp up” oversight of insurer climate risk, according to Guy Carpenter’s managing director of catastrophe advisory Jessica Turner.
The (re)insurance industry must continue supporting clients using fossil fuels to help them maintain the capital they need to transition to net zero, Aon’s Richard Dudley has said.
RenaissanceRe’s Cathal Carr has stressed the need for increased momentum around climate sustainability, which is essential to create a resilient global market as the (re)insurance industry looks to aid the transition to a green economy.
The (re)insurance industry’s involvement in supporting investors and clients in the carbon markets is crucial for the nascent sector to reach its full potential, RenaissanceRe’s Jeff Manson has said.
