Managing Climate Change Risks to Build Better Resilience
As climate risks become a growing threat to global stability, the insurance industry plays a critical role in mitigating climate change and promoting resilience.
At this year’s Airmic conference held on 6-8 June in Liverpool, climate change risks and resilience were key topics of discussion.
Liberty Mutual has set targets to reduce our emissions footprint globally and committed to achieve a 50% reduction in CO2 emissions by 2030 from a 2019 baseline.
A seminar session titled: ‘Building resilience — Going beyond the pandemic, what lessons can be learnt to build resilience in national and business life?’ welcomed an expert panel to the stage to discuss how organisations are changing the way they invest in resilience and risk and what can be done in terms of planning and prevention.
Sam Dawson, commercial sales director at restoration and repair company Belfor highlighted that there is an opportunity for businesses to be more proctive and to come together with their insurers, brokers and risk professionals to start to put things in place before an incident has occured.
He said: “Climate change and the risk from physical disasters are probably a bit more predictable nowadays. If you look back to just over 12 months ago and the extent of the flooding in Central Europe and the huge impact it had there.
"These kinds of risks are becoming more frequent and much more severe. That gives everyone more of an opportunity to be more resilient and being more resilient is about better preparedness.
“The trick is bringing skills and resources together. The opportunity to do that pre-incident has increased now. There are ways to do that - where you can get organisations to start thinking proactively and putting things in place.”
If we were more relevant as an industry then we would be better able to demonstrate our purpose to society and thereby be better able to attract talent into the industry.
Liberty Mutual is one insurer that is focused on mitigating climate risks and this forms part of its environmental, social and governance (ESG) strategy.
Denise Delaney, head of responsible business, at the firm explained how Liberty Specialty Markets is focusing on four strategic pillars.
She said: “At Liberty Specialty Markets we believe insurance can be a force for social good and our ESG strategy focuses on increasing customer resilience, enabling sustainable growth, improving lives and communities, and advancing diversity, equity, and inclusion. We’re in the business of identifying, managing, and mitigating risk, and also helping our customers adapt — all to make them more resilient.
“Liberty Mutual has set targets to reduce our emissions footprint globally and committed to achieve a 50% reduction in CO2 emissions by 2030 from a 2019 baseline. At Liberty Specialty Markets, we have set a goal of 40% female representation in leadership roles globally by 2025, a 7-point increase from our 2021 baseline of 33%.
She added: “The world is transitioning to a low-carbon economy, and we have a role to play as a global insurer and investor.
Climate change and the risk from physical disasters are probably a bit more predictable nowadays. If you look back to just over 12 months ago and the extent of the flooding in Central Europe and the huge impact it had there.
"We are committed to enabling a responsible transition by providing capacity to those in transition, offering leading risk advisory services to help customers advance their sustainability journeys, and by insuring and investing in emerging sectors and technologies to support ‘green’ growth. For instance, we were the first major carrier to offer capacity to WTW’s Climate Transition Pathway initiative, putting us at the leading edge of one of the first industry-recognised accreditation models for company transition plans."
At the closing keynote debate, which took place on the last day of the conference, Julia Graham, CEO of Airmic highlighted the strategic relevance of managing risk and insurance for businesses and that Airmic members needed better education on topics such as ESG.
The panel included Tom Clementi, CEO of Pool Re, who touched on Julia's point, explaining that the insurance industry needs to do more work so it's "more relevant."
He said: "If we were more relevant as an industry then we would be better able to demonstrate our purpose to society and thereby be better able to attract talent into the industry. Part of the reason we are not relevant is our proposition is not attractive."
He added: “If you really want whole of society resilience you need to get small and medium-sized businesses to be buying the product. They are not at the moment as I'm not convinced that our proposition is that attractive.”