With climate change-related events on the rise, insurers are looking carefully at how they help companies lessen the risks. Malcolm Pearson, Managing Director at Reason Global Insurance, the Sustainability Sponsor for the 2023 FIDI Conference, looks at the strategic changes movers can make to help the process
For the past few years, sustainability and climate change have been buzzwords across all industries. But the concept can appear abstract when you look at the personal and business choices available to you to lessen your impact on the environment.
Corporate social responsibility (CSR) has been a significant recent theme for businesses. However, when you compare an insurance broker and a moving company, there are very clearly different challenges to be met to deliver the best CSR you can, despite the overlaps that are relevant to both .
When looking at the changes you can make, the choices can be confusing and the associated costs difficult to justify.
Recently, I made the decision to install solar panels in my home. Rising electricity costs in the UK and reducing installation costs made doing this a very different proposition from five years ago. The move was also driven by my two teenage children, who are very focused on being environmentally friendly in their choices as they become young adults.
For all of us, the circumstances regarding our homes, cars and businesses vary greatly and influence those decisions, but we all need to focus on change that drives a healthier outlook and future for our businesses and considers the various options available.
Within the insurance industry, the notion of sustainability has become more tangible over the past few years. Underwriters and insurers are focusing on the risk management measures being employed by their insureds when it comes to the effects of climate change, and potential issues such as flooding and other weather-related risks that create loss and damage.
Questions being asked by potential insurers include checking how warehouses are managed, how often roofs and guttering are maintained, and how prudently the insured acts with regards to measures taken to minimise risks from climate change, such as mitigating the impact of flooding and heavy rainfall.
This is understandable given the rising number of claims resulting from the manner of loss or damage being reported. We are now seeing insurers in the marketplace looking for increased excesses on flood losses based on historical data – which is now more freely available and far more detailed – linking that with relevant risk-management measures to minimise the chance of these events causing large losses.
According to Allianz Global Corporate & Specialty (AGCS) analysis, natural catastrophes were the fifth-biggest cause of marine insurance claims by both frequency and severity for the five-year period ending December 2021. Extreme weather and natural hazards have contributed to many large losses in the past, with the loss of vessels and damage to cargos – extreme weather was a contributing factor in at least 25 per cent of the vessel losses reported in 2021 alone. Weather has also been a factor in a recent increase in the number of containers lost at sea.
In addition, according to a recent study by AGCS, climate change will increasingly impact marine insurance claims, with more extreme weather events and new exposures linked to the transition to net zero.
All of this shows there are no easy answers – but also that doing nothing is not the correct move. We should always be focusing on our business models to ensure we minimise risk where we can; and climate change and sustainability are now core to that thinking.
While we will never be able to remove all risk, we should be considering our processes around what we can minimise through strategic thinking surrounding the challenges climate change brings. If we do this well, sustainability won’t seem so abstract after all.
For the past few years, sustainability and climate change have been buzzwords across all industries. But the concept can appear abstract when you look at the personal and business choices available to you to lessen your impact on the environment.
Corporate social responsibility (CSR) has been a significant recent theme for businesses. However, when you compare an insurance broker and a moving company, there are very clearly different challenges to be met to deliver the best CSR you can, despite the overlaps that are relevant to both .
When looking at the changes you can make, the choices can be confusing and the associated costs difficult to justify.
Recently, I made the decision to install solar panels in my home. Rising electricity costs in the UK and reducing installation costs made doing this a very different proposition from five years ago. The move was also driven by my two teenage children, who are very focused on being environmentally friendly in their choices as they become young adults.
For all of us, the circumstances regarding our homes, cars and businesses vary greatly and influence those decisions, but we all need to focus on change that drives a healthier outlook and future for our businesses and considers the various options available.
Within the insurance industry, the notion of sustainability has become more tangible over the past few years. Underwriters and insurers are focusing on the risk management measures being employed by their insureds when it comes to the effects of climate change, and potential issues such as flooding and other weather-related risks that create loss and damage.
Questions being asked by potential insurers include checking how warehouses are managed, how often roofs and guttering are maintained, and how prudently the insured acts with regards to measures taken to minimise risks from climate change, such as mitigating the impact of flooding and heavy rainfall.
This is understandable given the rising number of claims resulting from the manner of loss or damage being reported. We are now seeing insurers in the marketplace looking for increased excesses on flood losses based on historical data – which is now more freely available and far more detailed – linking that with relevant risk-management measures to minimise the chance of these events causing large losses.
According to Allianz Global Corporate & Specialty (AGCS) analysis, natural catastrophes were the fifth-biggest cause of marine insurance claims by both frequency and severity for the five-year period ending December 2021. Extreme weather and natural hazards have contributed to many large losses in the past, with the loss of vessels and damage to cargos – extreme weather was a contributing factor in at least 25 per cent of the vessel losses reported in 2021 alone. Weather has also been a factor in a recent increase in the number of containers lost at sea.
In addition, according to a recent study by AGCS, climate change will increasingly impact marine insurance claims, with more extreme weather events and new exposures linked to the transition to net zero.
All of this shows there are no easy answers – but also that doing nothing is not the correct move. We should always be focusing on our business models to ensure we minimise risk where we can; and climate change and sustainability are now core to that thinking.
While we will never be able to remove all risk, we should be considering our processes around what we can minimise through strategic thinking surrounding the challenges climate change brings. If we do this well, sustainability won’t seem so abstract after all.
