Tackling protectionism will help underpin G20 efforts to address climate change risks

Following the recent communiqué from the second G20 finance ministers and central bank governors meeting, GFIA president, Don Forgeron, commented:

 

“GFIA wholeheartedly welcomes the commitment made by the G20 to address two key issues facing the global economy: climate change and protectionism.

 

“As underwriters of natural catastrophe risks, insurers are acutely aware of the risks posed by climate change. Natural catastrophes already have the potential to cause hundreds of billions of dollars of damage in a single year, and climate change could make this even worse.

 

“Therefore, it is vital that actions are strengthened to both minimise climate change overall and to adapt our societies to an already changing climate. This will require coordinated action involving both the public and private sectors. Indeed, the global insurance industry will continue to play its part, both in providing its expertise to public authorities on how to best shape adaptation efforts and as a bearer of natural catastrophe risk.

 

“Furthermore, removing barriers to open trade will help to avoid a build-up of climate-related risks in any one jurisdiction by facilitating the sharing of natural catastrophe risk across global (re)insurance markets.

 

“Currently several jurisdictions have measures in place that restrict the ability of foreign (re)insurers to transfer risk from those markets, which can lead to dangerous concentrations of risk in economies. Given that climate change will only continue to exacerbate the impact that natural catastrophes have on our economies, it is vital that we have the mechanisms in place to ensure that this risk can be shared.

 

“At the same time, removing trade barriers will help to facilitate the growth of individual insurance markets, which can benefit from the expertise and experience that foreign (re)insurers can bring. This can help to underpin and strengthen economic activity as economies around the world work on their recovery from COVID-19.

 

“This is another area where insurers have a key role to play. As major long-term investors, insurers can provide a significant amount of the long-term investment needed to underpin economies’ recovery from COVID-19 and the broader shift towards sustainability. One challenge they currently face is, however, the lack of reliable ESG data from investee companies. As such, GFIA welcomes the G20’s commitment to faciliate better transparency on sustainability profiles by companies.”

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