Insurers’ underwriting fuels climate change and nature loss – WWF and Deloitte

Pardon the Interruption

This article is just an example of the content available to mallowstreet members.

On average over 150 pieces of new content are published from across the industry per month on mallowstreet. Members get access to the latest developments, industry views and a range of in-depth research.

All the content on mallowstreet is accredited for CPD by the PMI and is available to trustees for free.

Many of the economic activities underwritten by insurance companies are fuelling climate change and biodiversity loss rather than addressing them, a new report by wildlife charity WWF Switzerland and consultancy Deloitte Switzerland has found. The two are calling on insurers to nudge customers towards greener behaviours, and say policymakers and regulators can facilitate this. 
The report, ‘Underwriting our planet: how insurers can help address the crises in climate and biodiversity’ covers a range of non-life underwriting fields, such as liability insurance, marine and vehicle insurance or property insurance with real-life examples from various industry sectors, says insurers’ actions on the environment fall short of what is needed, and suggests ways to achieve global climate and biodiversity goals. 
“While there is an overall increasing awareness of the considerable risks caused by extreme weather events, the insurance sector is barely addressing how the underwriting business is contributing to those risks,” according to the two organisations, which are calling on insurers to speed up the transition to a net zero and nature positive economy. 
"This summer, we witnessed devastating heatwaves and wildfires across Southern Europe, Northern Africa, Asia and Northern America. Insurance companies and their clients are particularly affected by these events as they lead to greater payouts and entire regions become uninsurable. It´s high time insurers address these risks by aligning their underwriting business with global climate and biodiversity goals to protect what is of value for our future,” said Thomas Vellacott, chief executive of WWF Switzerland. 
Deloitte Switzerland’s head of sustainability, Marcel Meyer, called on insurers to nudge their clients into more environmental behaviours.  
“With their reach to all industries, insurance companies have the ability to incentivise sustainable practices and promote responsible behaviors of its customers,” Meyer said. 
The two organisations note that last year, global economic losses from natural disasters were about $275bn, but only $125bn of the total loss was insured. The insurance gap could grow as insurance companies are increasing premiums, limiting coverage or completely withdrawing from markets in response to the frequency of natural disasters. 
They say policymakers and regulators should help insurance companies reach global climate and biodiversity goals by aligning insurance regulation, policies and supervision with recommendations by the WWF. 
The charity recommends insurance companies implement the following measures in their underwriting business:  

Do you agree that underwriting practices need to change to align with net zero and biodiversity goals? 

More from mallowstreet