Greater collaboration across the market is required and governments need to accelerate the transition to a net-zero economy through more innovative risk transfer products according to a new report by global insurance industry group ClimateWise.
The new report has also called out barriers that block product innovation and says more private-public partnerships are needed, including state-backed reinsurance pools.
The report draws on the expertise of more than 10 ClimateWise members, including Aon, Allianz, Aviva, AXA, Lloyd’s and Zurich, to make recommendations on how the insurance industry can speed up its crucial role in decarbonising the economy through products that help de-risk the transition to net zero.
In a whitepaper – Product innovation for net zero within the insurance sector – ClimateWise says collaboration ‘within and beyond’ the insurance sector will help push the drive to net zero. The whitepaper said the insurers should be actively engaging with the insurance supply chain and government.
ClimateWise chair and Aon global chairman reinsurance solutions Dominic Christian said, “Although the insurance industry is changing, that rate of change must accelerate and innovative climate products must be developed so that the industry can both enhance resilience and facilitate the transition.”
The paper lists nine priority areas for innovative insurance products that support climate mitigation and adaption, but it also lists seven areas for action to remove barriers and speed up climate product innovation.
In addition to working more with government, ClimateWise says underwriting climate risks needs to be backed by technology and deep-engineering expertise. A more long-term culture is needed to incentivise clients to use innovative products.
Icebreaker One CEO Gavin Starks said, “Better access to data could make or break the insurance sector’s response to climate change. It shouldn’t take enormous legal fees, hours of negotiations and expensive closed technical systems to share essential environmental data with insurers. The faster we develop an open standard to make data access easier, the faster the insurance industry can develop the products it needs to thrive in a net-zero economy.” A