In a first in IIS history, an environmental organisation has taken to the stage to speak on the value of nature in the insurance and risk management industry. "Natural structures such as coral reefs in Mexico and mangroves in Asia act as a buffer and dampener against coastal catastrophes, so their value in reducing risk is evident," said Mr Mark Tercek, President and CEO of The Nature Conservancy (TNC).
Joined by Managing Director Ms Kathy Baughmann McLeod, TNC has partnered with Blue Marble Microinsurance, led by CEO Ms Joan Lamm-Tennant, and has been urging the insurance industry to make greater efforts in protecting and conserving such coastal natural structures, which have been proven to have a significant impact in limiting damage caused by coastal hurricanes and floods.
“Protecting nature is seen as an expense that is in direct opposition to growing the economy,” said Mr Tercek. “But most governments miss the upside to conservation, and that is the long-term risk reduction nature can provide.”
Mr Tercek and Ms Lamm-Tennant are calling for a stronger partnership between the insurance industry and environmental organisations such as TNC. At present, TNC is working with several insurance players including Lloyd’s, XL Catlin and Guy Carpenter to examine the role of coastal habitats as a natural storm defence.
“Insurance is in the business of protection. In this case, the customer is nature and we don’t know this customer. TNC and their team can help us parametise the models that we use to calculate loss in a NatCAT event.”
“The question for governments and industries that are directly affected by these risks – the hospitality industry, for instance – is ‘Who is going to pay’?” said Mr Tercek. “While CSR initiatives do help greatly, there is limited funding in CSR. Insurance can help us and the governments find the right strategy to build capital.”
The partnership between TNC and Blue Marble Microinsurance was discussed at the Global Insurance Forum (GIF) yesterday. For more on the GIF, please check out our Conference Dailies or yesterday's coverage.