Insurers and reinsurers have an important role to play in climate change, Swiss Re argues in its most recent report called Climate resilience: how insurance can contribute to a new, “green” dawn.
Insurance companies can offer “risk protection services to help businesses minimize earnings volatility resulting from adverse weather conditions,” the reinsurer’s report reads.
Measures to put in place
To promote the green transition required to attain the United Nations objective of limiting the rise in temperature to 1.5° Celsius, insurance companies need to put in place several measures, Swiss Re adds.
Not insuring sectors and businesses that emit large quantities of CO2, adding adaptation measures to their underwriting processes and changing the criteria of their investment portfolios are three parts of the solution, the reinsurer explains. “Asset managers can contribute to invest through green bonds, infrastructure renewables and sustainable real estate projects,” the report reads.
“This will also raise people's awareness and reduce adverse selection against climate risks,” Swiss Re says, adding that integration of specific insurance for green infrastructure projects can facilitate availability of financing for such projects.
Economic advantages
A study by the European Organization of Economic Cooperation and Development, cited by Swiss Re, concludes that starting a transition to fight climate change may fuel long-term economic growth.
The reinsurer estimates that climate resilience could boost G20 GDP growth by 4.7% by 2050.
What’s more, a study by The Economist Intelligence Unit cited in the report shows that the value of assets at risk due to climate change may reach US$13.8 billion. Swiss Re consequently concludes that “all told, much more can and should be done.”
