As climate change brings more frequent and severe weather events and makes some areas in Australia uninsurable, the Australian insurance industry has started focusing on addressing the impacts of climate change and making the country more resilient.
Zurich teamed up with other insurance giants to establish the Net-Zero Insurance Alliance (NZIA), where the members committed to transitioning their insurance and reinsurance underwriting portfolios to net-zero greenhouse gas emissions (GHGs) by 2050. The giant shared with IBTV the sustainability-related challenges it has faced over the years, including pressure from investor activism and the rise of quiet and loud climate activists.
“There is public pressure. I think consumer expectations are changing. A recent survey mentioned that 43% of Australians will make climate-related decisions, [which] shows you the rise in consumer expectations, and that could be influenced by bushfires and recent floods,” said Shaneen Marshall, head of strategy and sustainability at Zurich.
She also noted that reporting frameworks, new IFA standards, and other factors – such as governments, investors, consumer expectations, and reporting – are culminating in increased pressure.
Meanwhile, IAG, which recently joined the NZIA and released a report on helping small businesses become more resilient to natural disasters, aired the same sentiments.
“Interestingly, we've seen the biggest acceleration within investors, and their knowledge and understanding of these issues [play an] important role in an organisation's financial success. You're increasingly seeing investors ask more questions through investor roadshows, taking sustainability indices more seriously,” said Ramana James, executive general manager for safer communities at IAG.
“On the government and regulator side, [we have seen] an increased focus on climate risk, knowing that they are significant across the economy, but they play out in the solvency and sustainability of corporations operating in a climate impacted world. So, APRA and the financial services sector [has] put out guidance around climate risk management. [Moreover], customers [are] increasingly impacted by severe climate change and natural peril events, so they're all taking this stuff more seriously, and they're starting to make choices around the products and services that they buy based on how those companies address these issues.”
Find out more about the sustainability challenges insurers face and how they address them by watching the IBTV episodes “Is Zurich the most environmentally responsible insurer?” and “IAG's sustainability and climate challenges.”
