Earth Day 2024: Spotlight on Insurance Industry’s Role in Addressing the Climate Crisis
Earth Day is April 22, an annual event demonstrating support for environmental protection. Initially held in 1970, a wide range of events occur today, with one billion people across 193 countries participating.
In recognition of Earth Day, we examine how the insurance industry is being called upon to help lead the charge on the climate crisis with strategies and solutions.
NAIC Adopts National Climate Resilience Strategy
The National Association of Insurance Commissioners (NAIC) adopted the first-ever National Climate Resilience Strategy for Insurance in the face of natural catastrophe losses and how they have impacted the property market. The goal of the strategy is to protect the nation’s property insurance market by giving insurance regulators the tools and plans to advocate for home hardening against wildfires, floods, and storms; utilizing catastrophe modeling information; better informing the public of risks; and ensuring new solvency tools are updated to incorporate further analysis of climate risks.
The states’ Property & Casualty Market Intelligence Data Call (PCMI), which collects and analyzes data on more than 80% of the U.S. property insurance market by premium volume, is a critical component of the NAIC’s strategy. The PCMI data call will collect data from more than 400 property insurers operating locally and throughout the country to provide state insurance regulators with a clear picture of what is going on in their respective property markets and the nation at large.
Geneva Association Report
Reinsurers are critical to rolling out the climate technology needed for industries to decarbonize, according to a recent report by The Geneva Association, a global association of insurance companies. In its second report in a two-part series on climate tech and insurance, titled Bringing Climate Tech to Market: The powerful role of insurance, The Geneva Association highlights the need for novel techniques to assess technology market readiness and funding, emphasizing the importance of insurers. According to a Geneva Association report of insurance C-level executives, reinsurers’ early involvement in climate tech projects is crucial for enhancing project risk assessment and securing financing.
The Geneva Association has also proposed an innovative Insurability Readiness Framework (IRF) that may be used to identify the areas of climate technology that offer the most significant obstacles to insurability. The framework includes two technologies to demonstrate its use: green hydrogen and carbon management.
“The adoption of climate technologies requires a collaborative effort from industries, insurers, policymakers, and others,” said Jad Ariss, Managing Director of The Geneva Association. “Insurers are essential for securing financing and managing project risks. By addressing funding gaps and leveraging insurance solutions, insurers can accelerate the deployment of climate technologies and work towards achieving global climate targets.”
In related news, Zurich Insurance Group recently announced that it will stop insuring new oil and gas projects. According to AM Best, Zurich will publish further details later this year along with its climate transition plan. “By the end of the year (2024) we expect these positions to be fully embedded within our underwriting process,” Zurich told BestWire in a statement.
According to AM Best, Tokio Marine Holdings Inc. said in March that it will collaborate with approximately 60 enterprises in greenhouse gas-intensive sectors to build decarbonization programs and tighten its insurance requirements for such industries. According to a statement, the group’s main commercial insurer, Tokio Marine & Nichido Fire Insurance Co. Ltd., would no longer provide insurance underwriting, investment, or financing to enterprises that do not have decarbonization strategies in place by 2030. These 60 companies are responsible for approximately 70% of the insurance underwriting portfolio’s greenhouse gas emissions.