A federation of 34 national insurance associations has urged world governments to act on the impact of climate change as it threatens the affordability of financial protection.
In an insight briefing published last week, Insurance Europe said the insurance sector is especially aware of and sensitive to the risks posed by climate change.
“In particular, the sector is concerned that continuing global increases in temperature could make it increasingly difficult to offer the affordable financial protection that people deserve and modern society requires to function properly,” the federation said.
Insurance Europe called on policymakers to make sure that the 2015 Paris accord is fully implemented and that concrete steps are taken to limit climate change.
The federation said that “as a matter of urgency,” action must also begin to adapt to an already changing climate.
“It is public authorities that must take the leading role in enhancing public resilience to the effects of climate change, mainly through effective prevention planning,” Insurance Europe said.
The goal can achieved in various ways at the national or local level, Insurance Europe explained, such as strict enforcement of building codes and provision of tax incentives to promote private investment in climate-proofing infrastructure projects.
“Public authorities’ efforts should be part of long-term adaption strategies that take account of long-term climatic situations posed by the expected rise in extreme weather conditions and the increasing frequency of weather events,” the federation said.
For their part, insurers are helping fight climate change by updating their risk assessment and underwriting policies, according to Insurance Europe, with some companies moving from using historical methods for natural catastrophes to forward-looking risk models.
Insurers are also implementing more sustainable business practices, such as incorporating incentives into their products to reduce their own carbon footprints. Other insurance firms also aim to invest more in environmentally friendly financial assets, including green infrastructure or renewable energies.
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