Rather as if the weather had been keeping an eye on the agenda of Les Rendez-Vous de Septembre, delegates at the annual reinsurance conference and knees-up awoke on Tuesday 10 September to find that the seasonal balmy loveliness had evaporated and been replaced by cold winds and persistent rain.
Brave delegates abandoned all hopes of finding elusive taxis and instead borrowed hotel umbrellas in order to shuffle damply towards the main hall in the Fairmont Hotel to listen to a session called ‘Politique publique, assurance et gestion du risque climatique’ which was opened by a very passionate SCOR chairman and CEO Denis Kessler – ahead of a main presentation by honorary chairman of the executive committee, Institute for Advanced Study in Toulouse Jean Tirole, a recipient of the Nobel Memorial Prize in Economic Sciences for his analysis of market power and regulation.
Mr Kessler painted a stark picture with his opening remarks that “evidence of climate change is absolutely compelling globally.” He went on to say that “climate change is mostly attributable to human activity. We have to find a solution.”
“The risks and opportunities to (re)insurers and their customers from global warming are profound,” he said.
“Climate change expands and transforms the risk universe, so we are directly concerned as risk carriers. Climate change-related risks will affect investments on the asset side and P&C and life lines of business alike on the liability side. In the more extreme warming scenarios, the risk universe will be so profoundly modified that maintaining affordability of insurance, and insurability throughout the world is likely to be challenging,” Mr Kessler said.
He went on to outline the categories of risk that need to be understood and addressed by insurers and reinsurers.
Impacts on property, infrastructure, mortality and morbidity amplified by trends of urbanisation, value concentration, non-resilient land use and infrastructure vulnerabilities.
Risk of economic dislocation and loss associated with transitioning to a low carbon economy devaluation (‘stranding') of carbon intensive assets/increase in business costs.
Potential growth in related litigation actions affecting (re)insurers themselves or companies to whom they provide D&O, PI or third party environmental cover.
Professor Tirole then went on to highlight the social responsibility that all parties have in addressing climate risk and emphasised strongly the complementarity between the market and the state in finding a solution.