Insurance Europe, the European Insurance and Reinsurance Federation, published a statement at the end of COP26, the 2021 United Nations climate change conference that was held in Glasgow last November. The document expresses the support of the European Insurance companies for the sustainability messages that came from COP26, as well as for the goals of the Paris Agreement and the European Green Deal.
In its statement, Insurance Europe outlines how insurance companies are already taking action to achieve sustainability goals with many initiatives and coalitions that have already been established to both mitigate the worst climate-change scenarios and help citizens and businesses cope with the outcomes.
However, a lot more can be done.
Insurers could undoubtedly achieve real change if governments were to take actions that could unleash the sector’s potential. These actions could include committing to investing in adaptation and prevention measures, but also defining “what will be insurable” in the future.
In parallel, insurers themselves have a crucial role in fighting climate change, leveraging their underwriting activities, their investments, their own footprint, and the sharing of best practices.
Insurers as underwriters
Through their underwriting activities, insurers directly contribute to climate adaptation.
According to Insurance Europe’s statement, the first point where insurers can make a difference is connected to their capability to measure and estimate the price of climate risks, thanks to their role in covering the economic losses that result from all the natural catastrophes that are related to climate change.
Moreover, insurers’ knowledge and expertise regarding risk management could be an asset to raise awareness about the risks we are facing because of climate change. For instance, the claims data and expertise that have been gathered over the last decades offer the chance not only to advise on and develop innovative solutions, but also to guide climate risk management.
In this regard, insurers could also use their underwriting activities to “incentivise policyholders to invest in adaptation and prevention measures or in green and energy-efficient alternatives”. By doing so, they could have the power to shift behaviours and practices towards a more sustainable direction.
Insurers as investors
As stated by Insurance Europe, insurers not only are purchasers of assets that promote sustainability, but they also can “issue sustainability linked bonds” and work with their partners to invest in and insure green infrastructure, supporting the shift towards an efficient and more resilient economy.
Insurers’ own footprint
Finally, insurers can take action to reduce the impact of their operations in terms of emissions, in order to meet Europe’s ambitious targets to reduce greenhouse gas emissions in the area by 55% by 2030 and achieve a net-zero economy by 2050. Here, our partnership with insurers as a Software company and the leader in Europe supports the drive towards the mastering of energy needs across their IT landscape.
Cooperation and sharing of best practices
Creating a common knowledge is also a fundamental point for the creation of real impact. With this goal in mind, Insurance Europe has launched its new Sustainability Hub, a website that collects examples of insurers actions that are contributing to the fight against climate change and its effects, as well as meeting sustainability goals. This Hub includes best practices and tangible actions for six different sectors: underwriting; risk awareness and prevention; public-private partnership: investment; reporting and transparency; industry commitments, alliances and coalitions. Sharing these kinds of information across industries will add tremendous value to Europe’s push towards a Sustainable model.