GFIA is proud to join the worldwide collective momentum to combat climate change that is showcased during COP26. GFIA is composed of 41 member associations and 1 observer association which together include insurers and reinsurers from 64 countries. GFIA represents the interests of a wide spectrum of companies ranging from small local players to internationally active groups. Many insurers, at company level, through their participation in local or global financial sector alliances, and in a wide variety of ways, support the goals of the Paris Agreement. They are determined to work closely with the public sector to develop adaptation and mitigation solutions to climate change and to enhance resilience.
As underwriters, insurers directly contribute to adaptation through their underwriting activities. By covering economic losses due to natural events and natural catastrophes, they help to manage the economic impacts of climate change. Insurers play an important role in measuring and pricing climate risk to inform risk management, supporting the development of innovative adaptation solutions, and providing economic support when disasters strike.
Insurers across the world are already integrating climate risk into their risk modelling and are developing innovative solutions to enhance adaptation and mitigation. They have decades of experience in risk modelling and in managing claims that are made as a result of climatic or weather-related impacts. This claims data yields tremendous insights and also equips insurers with valuable expertise that can guide climate risk management.
As investors (asset owners), global (re)insurers support sustainability objectives and can factor in sustainability considerations when investing. Not only are (re)insurers the purchasers of assets that promote sustainability, but many also actively seek to issue sustainability-linked bonds and to work with partners to finance and develop green infrastructure. Also, life insurers are ideal partners for long-term investments. Insurers will further support sustainable investment as additional investment grade sustainable assets become available.
Insurers contribute to mitigation efforts through their own corporate targets, helping foster mitigation through voluntary incentives and risk-based pricing, as well as through their investments in sustainable assets. Mitigation measures are essential to fight against climate change. If no measure to mitigate climate change is taken, global temperatures are projected to rise by 3°C and global GDP could lose up to 18% by 2050*.
Close collaboration between the public and private sectors can facilitate the industry’s work in reducing and transferring risks, including climate risks. Also, when designing adaptation and mitigation policies at local, national and international level, public authorities should seek the participation of insurers due to their expertise in climate-related underwriting and risk modelling. Insurers are also committed to working closely with public authorities to improve public understanding of climate risks to foster more sustainable behaviours across society, to steer adaptation and mitigation measures, and to support better climate-related life and health outcomes.
Close collaboration and communication with the industry at both global and local level is vital to successfully fight against climate change. The transition to a sustainable economy needs cross-sectoral action involving all economic stakeholders and decision-makers. (Re)insurers and policyholders share a common goal in encouraging this transition.
*Swiss Re Institute, April 2021