A global expert has said that the insurance industry has a “major opportunity” to help SMEs address risks presented by climate change.
Butch Bacani, head of the U.N. Environment’s Principles for Sustainable Insurance Initiative (PSI), a global framework for the insurance industry to address environmental, social and governance risks, said that the industry can help with a rising problem.
“That’s a major opportunity for the insurance industry to step forward to advise SMEs on how to assess climate risks and support them in the development of resilience plans,” Bacani told the Thomson Reuters Foundation at the Resilient Cities conference in Bonn this month.
In a 2015 survey by global insurer ASA, in collaboration with PSI, 59% of SMEs said that they have been affected by climate change.
Only a quarter of respondents said that they had implemented plans to deal with climate risk even though 78% noted that they believed the effects of global warming posed a long-term risk.
The PSI, which was launched in 2012, has more than 100 signatories including insurers representing more than 20% of world premium volume and US$14 trillion in assets.
Bacani also noted that the expertise of the industry could also be used to lower the risks cities face from climate-related issues. By sharing knowledge on land-use planning and building codes, the industry would be able to help cities and urban areas cut their risks to natural disasters which would, in turn, lower premiums.
“Linking risk reduction efforts to premiums and insurance coverage is critical to changing behaviour and promoting good risk management in urban areas,” Bacani concluded.
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