Speaking to The Insurer TV as part of its Leading Voices series, Croft said the UK government must play a role in helping to establish a legal and regulatory framework that will allow London market players to explore ESG-related opportunities.
“[One] element where the government can really help is making sure that we have the right and flexible regulatory framework in place,” he said.
“Everyone accepts that net zero is not going to be achieved unless we adopt technologies that haven’t even been thought of yet, let alone invented and developed. So we’re going to have to find a way as an industry to support that process,” Croft said.
Croft spoke to The Insurer TV shortly after Liiba told the All-Party Parliamentary Group on Insurance and Financial Services that the transition to net zero is forecast to provide an additional $125bn in net premiums for the (re)insurance industry by 2030.
And for the London market to capture these opportunities the trade association is also accelerating its collaboration with government and regulators to develop an ILS market in London.
Croft highlighted Liiba’s discussions with the Prudential Regulation Authority around the creation of a regulatory framework to allow for such vehicles, in order to make London a more liquid ILS market.
“We’re also having discussions with the government about how it can make the UK legal framework and regulatory framework better accommodate captives because there’s another method of delivering insurance and mitigating risk,” he said.
“That will just massively widen the pool of capital available in London which we’ll need if we’re going to find commercial solutions to the climate challenge, which I think is absolutely achievable without the public-private pooling arrangements,” Croft added.
Croft also touched on the Business of Resilience campaign, led by the UK’s Department for International Trade, which aims towards the creation of a public-private partnership to insure against systemic risks such as cyber and climate change.
Last month, The Insurer TV interviewed Aon’s global chairman of Reinsurance Solutions Dominic Christian, who is chair of the climate taskforce of Resilience UK. During the interview, Christian explained that the initiative looks to maximise the capabilities across all sectors by connecting them and advising how to best use the expertise.
Croft said one of the challenges the (re)insurance industry has been facing around the transition to net zero is the lack of “proper, independent” accreditation of net-zero plans that would ensure a proper delivery.
So far, brokers have been working closely with their clients on the deployment of plans for the transition to net zero, but such projects have not been subject to any type of regulatory scrutiny.
“You need some sort of independent verification for that process for insurers to build confidence in those plans that allow them to develop products and develop the coverage that encourages and rewards clients for moving towards the goals that we will need to achieve,” Croft said.