On 7th and 8th June 2021, the Insurance Development Forum (IDF) hosted its virtual Summit. The aim: to unite organisations in their approach to combating climate change.
With leading voices and prominent thinkers, the event not only highlighted conversations and opportunities about climate change, but also how the IDF is nurturing operational progress within the broader insurance community. Reflections on this important topic were shared during the first session of the day ‘Addressing the Risk Challenge: Fundamental View Points’.
Moderated by Ivo Menzinger, managing director of Swiss Re and Co-Chair of the IDF Operating Committee, expert speakers Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF); Denis Duverne, Chairman of the Board of Directors at AXA and Chair of the IDF Steering Committee; Mark Carney, UN Special Envoy for Climate Action and Finance and UK Prime Ministers COP 26 Finance Advisor; and David Maplass, President of the World Bank Group, revealed their visions regarding the role that insurers can play and the many opportunities for collaboration.
As Carney pointed out, extreme weather-related loss events have tripled since the 1980’s, and yet the protection gap in the developing world is growing. But as the group agreed, insurance can play a central role in building the necessary resilience for these countries.
“What matters are disclosure standards, data, and stress testing for risks,” Georgieva said. “Research shows that – when coordinated – a green infrastructure push across economies can create millions of new green jobs – in excess of jobs we may lose to the transition. As we build forward, it is about integrating our work, sharing best practice, and expanding policy coverage.”
The road to resilience
Actions like the recent agreement by the G7 to move towards mandatory disclosure of climate-related risks, is one way in which we can move forward, but this is only the beginning. As Menzinger pointed out, it is about ensuring that every financial decision takes climate change into account.
“We need to look for financing techniques that recognise the global benefits from change in even the poorest countries,” Maplass added. “Take the transition out of coal; it is not only about getting the new investments needed for electricity generation, but the process of how countries transition away from high carbon activities to lower carbon activities. Countries need to think about where climate fits into their development plans – and ensure that plan makes best use of the financing available.”
The words expressed during the session were not only encouraging, but outlined potential for collaboration – especially with platforms like the IDF’s open access global risk modelling alliance – and it is clear there is a shared goal to help those most vulnerable countries; not only in managing the physical impacts of climate change, but to enhance resilience too.
Denis Duverne said, “We have created the Global Risk Modelling Alliance platform, and we have as insurers and through the IDF, started to provide funding for this. We need some public funding to build that too because the risk models that we have are very good for developed markets, where we have a very strong presence, but it is insufficient due to the protection gap for emerging countries – we are building this facility based on open source models, but we need more funding for this and we need organisations like the World Bank and others to then utilise this platform once it’s built and contribute to it.”
Carney concluded: “It is about seizing opportunities; differentiating between those companies who are part of the solutions and those who are part of the problem. It means backing companies with net-zero plans with the necessary finance to turn those plans into actions. Climate change is becoming the defining issue of our lifetime. We need an insurance and financial system that can address it.”
To access the IDF Summit 2021 sessions in the On Demand Library, please register here, or if you attended the event, please use the same unique link you received when you registered to access the site.
6th October, 2021