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Insurance Europe shines spotlight on industry’s climate action role

Insurance Europe shines spotlight on industry’s climate action role | Insurance Business UK

Insurance Europe shines spotlight on industry’s climate action role

Brussels-based Insurance Europe, which consists of 37 national insurance associations, has launched a dedicated “Sustainability Hub” that highlights the industry’s contributions towards a sustainable world.

The online resource features six categories – underwriting; risk awareness and prevention; public-private partnerships; investment; reporting and transparency; and industry commitments, alliances, and coalitions.

Under alliances, for instance, it was noted that Insurance Europe is a Green Recovery Alliance member and a supporter of the Net-Zero Asset Owner Alliance. Several European insurers are also signatories to the UN Principles for Responsible Investment.

In the area of underwriting, there was special mention of the Lloyd’s insurance market, which is working to improve the analysis and quantification of regions and risks that are either less modelled or not at all. Insurance Europe said catastrophe models will have an increasingly important role to play as the climate changes.

“Non-life insurance necessarily involves dealing with the effects of climate change, since it includes cover for environmental and weather-related risks,” stated the European insurance and reinsurance federation. “Insurers offer that cover to policyholders on the basis of their vast knowledge of the risks related to extreme weather events and their expertise in measuring, modelling, and pricing weather-related risks.

“What is more, insurers can – and do – use their underwriting approach to motivate policyholders to reduce their risks by investing in adaptation and prevention measures or to reduce their carbon footprints by opting for green/energy-efficient alternatives. They do this through risk-based insurance premiums; excesses or deductibles; requiring certain prevention measures as a condition of a policy; and other policy terms and conditions.”

In terms of risk awareness and prevention, Insurance Europe cited examples of awareness-raising campaigns, education-related initiatives, as well as tools and solutions for both consumers and insurers.

The industry body, in relation to investment, added: “The transition to a carbon-neutral economic model requires long-term financing. European insurers – Europe’s largest institutional investors with around €10 trillion in assets under management – play a key role here.

“Insurers have been at the forefront of sustainable investment for many years, taking concrete actions such as implementing sustainability-related disclosures, standards, and strategies into their portfolios.”