Future Focus 2030: The climate change podcast

For its part the insurance industry has contributed to this objective by:

• Offering new schemes and products to help insure those invested in boosting renewable energy production.
• Offering more competitive rates to incentivise the use of ‘cleaner’ energy.
• Putting pressure on its supply chain to commit to a prescribed ‘green agenda’.
• Withdrawing investment in businesses associated with construction and operation of coal fired – or other carbon heavy fossil fuel – plants.

Indeed insurance trade bodies saw playing a key role in the climate change movement as a key part of rebuilding trust and faith in the sector after its reputation took a hit due to highly publicised pandemic-related claims disputes.

Pressure was also applied by the Financial Conduct Authority, which extended the requirement for ‘commercial companies’ with a premium listing to make climate related disclosures, to other sizable businesses during the decade. Today three quarter of the ABI membership [by firm numbers], 20% of British Insurance Brokers’ Association members [by firm numbers], 15% of MGAA members [by firm numbers] and all Lloyd’s syndicates are covered by this, with further extensions planned. 

The focus on climate change has been further intensified by the fact the UK continues to be hit by significant weather events, with it seeing losses of over £500m three times over the last ten years. ‘Resilient’ improvements [rather than repairs] have become more popular after the government reformed the £5,000 flood resilience grant scheme to help homeowners make proactive improvements to their properties to withstand future flooding. Before households could only access after they have been flooded.  

The insurance industry has invested in significant climate change research efforts, and there is a growing number of roles within businesses such as chief science officer to help lead these projects.

Consumers now rank ‘green credentials’ fifth overall among factors when buying insurance, with it rising to third among 18 – 25 year olds. It is also a major recruitment factor for school/college leavers.

Following the Covid-19 pandemic insurers also dramatically reduced their carbon footprints linked to travel, especially internationally, with the benefits of video conferencing coming to prominence.

The streamlining of property portfolios in keeping with the desire of more staff to work remotely, has also seen dramatic reductions in waste production and energy efficiency.

Although there has been some improvement in terms of green emissions globally, there has been a growing trend for business impacted by a withdrawal of capacity to self-insure and the captive market remains active here.

Based on this hypothesis, Insurance Post content director Jonathan Swift sat down with Dr Richard Hewston, head of strategy, environment and climate change, Verisk Maplecroft and Shane Latchman, vice president and managing director, AIR UK, to discuss the evolution of modelling/ mapping climate change risk and how insurers can use data more intelligently to quantify them.

The trio also discuss how the Covid-19 pandemic has impacted the insurance sector’s thinking about climate change risk; and which natural hazards it might priortise.