The Insurance Sector
The insurance sector is fundamental for economic growth and resiliency. Its primary roles are as a risk manager, risk carrier, investor and money manager. It is the largest sector by revenue, the second largest institutional investor and a substantial manager of third-party assets. As such, insurance has the potential to play a foundational role in the management of climate-related risks and opportunities for individuals, households, corporates, and public authorities.
The Insurance industry has acknowledged that failure to address climate change creates one of the highest potential socio-economic risks to our society. Only recently, the focus of the climate change debate has moved from being mainly a scientific, environmental and social responsibility issue to one of the core drivers of economic development and risk management. The rising costs associated with physical risks of climate change is creating a shift in governments’ and private sector approaches, from ‘inaction’ or ‘post-disaster reaction’ towards a comprehensive and more integrated risk management approach.
Increasingly, there is a recognition of the key climate resiliency role for the insurance industry as risk management experts and risk underwriters, yet there is a large, and in some places growing, protection gap in relation to climate change and resiliency that needs to be addressed. In addition, climate change is making it more difficult to access and afford.
The GCCR plans on exploring with the insurance industry opportunities to access and share data that will assist risk management and risk transfer. Areas related to climate risk to be explored may include:
- Hurdles to the expansion of risk transfer solutions
- Limited access to risk information and related risk pricing difficulties
- Limited take-up of disaster insurance
- Regulatory barriers to access global reinsurance
- Scalability and sustainability of insurance program
- Statutory restrictions on data sharing.