Insurers have been on the front lines of climate change for decades and the industry has a history of transforming itself to survive and grow in the face of these challenges, says Intact Financial CEO and past chairman of the Geneva Association, Charles Brindamour.
Indeed, as early as 25 years ago, our ability to protect homes and businesses faced an existential threat from an increasing burden of natural disasters. The industry has had to rethink itself in terms of data, predictive tools, products, service models, as well as its supply chains,” he told those gathered for a virtual conference with CEOs and senior officials from the insurance industry, financial sector, engineering community, government, the United Nations, OECD (the Organisation for Economic Co-operation and Development), the World Economic Forum and the World Business Council for Sustainable Development.
With that history of transformation, he says the industry can help power and shape the transition to a net zero world. “But the challenge is massive,” he told those gathered for the Geneva Association presentation, Future-Proofing Technological Innovations for a Resilient Net-Zero Economy. “To succeed, focus and then alignment between all pillars and layers of society will be essential.”
Climate change is an opportunity to both help society and also to capture opportunities in the marketplace, he told the group. “Responsible business leaders should see this transition as the most important opportunity of the coming decades,” he says. “I think insurers can provide foundational expertise to help combat the challenges of climate change. We can be a key agent in de-risking the transition towards a sustainable future by leveraging our strengths and expertise in data analytics, and pricing, and risk management, as well as prevention.”
Trillions to invest
That expertise, discussed at length following Brindamour’s comments in two panel discussions on the matter, is three-fold. First, the industry already has ongoing relationships with billions of customers globally where customers are engaged in discussions about risk and prevention. The industry also has trillions to invest in industries in transition. As mentioned, it also has the expertise in risk management that will be needed to bring emerging technologies to market.
“It is a massive societal change. I think it’s important to understand that governments actually are the designated drivers on the road to net zero,” Brindamour adds, saying they have a role to play in shaping the agenda and steering private capital and consumers towards this agenda.
If government is the driver, then, he says the roadmap we need should also have three critical elements. He says priorities first need to be made clear. “Too often I’ve been sitting in discussions on climate, with lots of vague ambitions and a whirlwind of ideas,” he says. “In my experience it’s been extraordinarily difficult for governments to establish a focused agenda, one that we can concentrate on over time. Setting priorities is key to success.”
Second, he says government behaviours should then be consistent with those priorities and intentions – legislative spending, procurement, taxation, regulatory activity, incentives and penalties should all have some degree of consistency, he says, “otherwise private capital is confused.”
Third, he says public capital investments need to be directed at future-proofing critical infrastructure.
“The world is not short on good ideas,” he concludes, “but focus, and intensity, and action are essential to today’s success.”