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‘Underwriting Our Planet’ finds that rather than addressing climate change and biodiversity loss, many economic activities underwritten by insurance companies actually fuel the twin crises.
WWF Switzerland and Deloitte
Switzerland have co-launched a report
that offers a first comprehensive insight into the impact of insurance
companies' underwriting business on climate change and biodiversity loss, and
how this trend can be reversed to achieve global climate and biodiversity goals.
It covers a wide range of non-life underwriting fields — including liability
insurance, marine and vehicle insurance, and property insurance — with real-life
examples from various industry sectors.
Underwriting Our Planet: How Insurers Can Help Address the Crises in Climate and Biodiversity
finds that, rather than addressing the twin crises, many economic activities
underwritten by insurance companies fuel climate change and nature loss.
Although some insurance companies have started to integrate environmental
considerations into their business
actions undertaken fall short of what is needed. For example, while there is an
overall increasing awareness of the considerable risks caused by extreme
the insurance sector is barely addressing how the underwriting business is
contributing to those risks.
“The insurance industry has the power to play a leading role in our effort to
work towards a sustainable future,” says Marcel
Meyer, Head Sustainability Services
at Deloitte Switzerland. “With their reach to all industries, insurance
companies have the ability to incentivize sustainable practices and promote
responsible behaviors of their customers. By incorporating environmental
considerations into their business practices, insurers can help protect
biodiversity, mitigate climate change, and build a more resilient and
As the report asserts, the most powerful action insurance companies can take to
mitigate the risks they face is to become catalysts — in their twin roles as
institutional investors and risk underwriters — for reaching global climate and
biodiversity goals. Whereas their role as investors has been covered
extensively, the relevance of the underwriting business to achieving those goals
has been largely overlooked. Many insurance companies still do not fully
acknowledge the responsibility they have for the economic activities they
insure: For example, according to unpublished estimates from industry analyst
Insuramore, insurance companies make US$30
billion annually in gross written premiums from underwriting oil and gas
extraction; and many large insurance companies still have coal policies that are
not compatible with global climate goals.
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“The impact of insurance on biodiversity may seem abstract — but it is not,”
Lukas Stricker, Head of Further
Education at ZHAW’s Institute of Risk &
Insurance, says in the
report. “Insurance is woven into almost all economic activity and hence can help
transform it from destroying nature to building it up again.”
Through the report, WWF and Deloitte are urging the insurance industry to fulfill its underlying purpose — to protect its customers and their assets — by acknowledging its important enabling role as underwriters and embracing its
responsibility for the effects of the economic activities it underwrites. The
report aims to shed light on the positive and negative links between insurance
underwriting and climate change and biodiversity loss by examining the
relationship of underwriting activities to the four main drivers of biodiversity
changes in land and sea use
direct exploitation of organisms — for example, through overfishing
climate change — particularly, as it’s impacted by fossil fuel production and infrastructure
While there are encouraging signs from individual insurers — such as
which integrates subjects such as plastics, deforestation, industrial pollution,
and the circular economy into its engagement programs — and collaborative
efforts such as King Charles’ SMI Insurance Task
for the most part the insurance industry has been slow to take the
when it comes to addressing its increasing climate-related risks. As the report
points out, with $6.86 trillion in gross written premiums
the industry has enormous potential to reduce the negative impact of climate
change and nature loss through its underwriting business and to speed up the
transition to a climate-resilient, nature-positive
Instead, many companies are responding to higher expected losses by increasing
insurance premiums, limiting coverage or completely withdrawing from markets.
In 2022, global economic losses from natural disasters were about $275 billion
— but only $125
the total loss was insured; and those figures do not include the non-monetary
harm to people and nature. In Florida, flood insurance
year are expected to double or even triple for thousands of homeowners in areas
prone to flooding. Meanwhile, in California, after several seasons marked by
at least three big insurance companies have ceased to underwrite new policies
for home insurance.
The report highlights several options for insurance companies to stop supporting activities that continue to drive
negative environmental impacts and to become catalysts for a fast and fair,
climate-resilient transition. Taking swift action on climate and biodiversity is
in the best interest of insurance companies in the face of the threat of
uninsurability. WWF recommends insurance companies implement the following
measures in their underwriting business:
Strategically align underwriting policies with global climate and
biodiversity goals and implement corresponding transparent and measurable
Engage with clients and insurance brokers to align with those goals, and
advocate for a fast and fair, climate-resilient transition.
Promote climate-resilient choices by clients; the adoption of new, clean technologies and
and the implementation of circular principles through the design of
insurance products and claims-management processes. For example, insurance
companies should offer new products for renewable energy or recycling
projects, nature-based solutions, incentives for homeowners to (re)build to the highest sustainability
standards, and foster circular behaviors and principles by favoring “repair over replace” during claims management.
Review policies to eliminate “harmful” incentives that impact the
environment and people (“moral hazard”) and instead, engage clients and
other stakeholders to adhere to the highest environmental standards.
Exclude the most environmentally harmful economic activities and sectors —
such as expanding fossil-fuel industries, deep-sea mining,
from insurance policies — and projects that do not benefit from free, prior
and informed consent by Indigenous Peoples and local communities, or in any
other way infringe on their rights.
Communicate clear phase-out of any fossil-fuel-related business in line with
the International Energy Agency’s Net-Zero Emissions by 2050
The report urges policymakers, insurance regulators and supervisors to help
insurance companies to reach global climate and biodiversity goals by aligning
insurance regulation, policies and supervision with the above recommendations as
part of their transition planning towards a climate-resilient, nature-positive
"This summer, we witnessed devastating heatwaves and wildfires across Southern
Europe, Northern Africa, Asia and Northern America,” says Thomas
Vellacott, CEO of WWF
Switzerland. “Insurance companies are particularly affected by these events as
cost increase is leading to greater payouts and entire regions become
uninsurable. It’s high time insurers address these risks and align their
underwriting business with global climate and biodiversity goals."
Published Sep 26, 2023 8am EDT / 5am PDT / 1pm BST / 2pm CEST