(ITIJ) - As global attention on COP26 reinforces the urgency of keeping global warming to 1.5°C, a new paper from the insurance leaders’ group ClimateWise maps out challenges and improvements to new independent underwriting tools to support the transition to a net zero economy.
The report states that ‘the insurance industry could support and steward the transition to a low carbon, resilient society through incentivising stakeholders and taking practical actions on underwriting activity. These need to draw on their existing knowledge and expertise on risk management and applying it to the problems posed by climate change’.
Policy makers and regulators need to collaborate
Dominic Christian, Global Chairman Reinsurance Solutions at Aon and ClimateWise Chair, said: “As net zero commitments develop for the insurance industry from our operations to investments and now underwriting, business policies and approaches needed will reply on collaboration across the insurance value-chain.”
To propel net zero underwriting practices, the report outlines key considerations, including:
- Setting boundaries for emission scope for the insurance industry
- Measuring net zero alignment with carbon footprinting, transition pathway evaluation and temperature score
- Understanding net zero implications for each insurance underwriting lines of business
- Reacting to different insured client, asset, and activities.
The report concludes that policy makers and regulators need to collaborate with the insurance industry to enable standardised assessment of climate risk and net zero alignment, as well as consistent boundaries of emissions reporting and understanding of transition pathways.
