To summarise; the plan seems to be to make insurers stump up into a pooled fund, so that part of the expense of de-carbonising the economies of the developing world, can be funded by insurers. Those costs are open-ended, nobody has any idea how much it will cost to replace the cobalt mines of Africa, or the gas extraction & pipelines of Russia.
The key word below is `just’ which roughly translated means a transfer of wealth and assets from the private sector into entities controlled by a centralised, global government, or their NGOs, all chanting Build Back Better in unison. Interesting that insurers seem very keen on funding as much UN-backed climate change stuff as the organisation can dream up, but has anyone asked the poor policyholders if they wish to pay an extra 20% on their premiums to fund this utopian experiment?
A new paper from the University of Cambridge Institute for Sustainability Leadership (CISL) launched at COP26 urges policymakers, financial regulators and industry to expand risk sharing systems at scale to tackle the Climate Emergency. If applied, it will enable a radical global transformation to protect lives and livelihoods, now and in the decades ahead.
Risk Sharing in the Climate Emergency: Financial regulation for a resilient, net zero, just transition asserts that to manage risks they have to be shared. It proposes twenty concrete steps to urgently govern, manage, and reduce climate risks for a just, resilient transition to net zero in developing and developed countries.
Bronwyn Claire, Sr Programme Manager for insurance leaders group ClimateWise said: “Traditionally expertise in risk sharing has sat with the insurance industry. Through our collaborative insights and desire to accelerate the transition to net zero, ClimateWise has seen how the expansion of these skills and understanding into a much wider group of economic and policy decisionmakers is vital in the race to tackle climate change.
“COP26 leaders gathered in Glasgow have the opportunity to recognise the importance of risk sharing to support the transition to a resilient, net zero economic and finance system. Robust disaster risk recovery and net zero aligned economy and society depends on the framework of the financial system reflecting the impact and future implications of climate risk.”
Throughout history, individuals have come together to protect what they value and stabilise their futures by sharing risks through collective pools of resources. Modern risk-sharing systems include social protection, informal community networks and the insurance industry. Each has crucial roles that can be applied to the climate crisis. These systems together cover approximately one third of global GDP. However, their distribution is uneven and where they do exist, the response allocated to climate risks is minimal.”
Dominic Christian, Global Chairman Reinsurance Solutions Aon and Chair of ClimateWise said: “As we each face the challenge of managing climate risk in our personal and professional roles, there is a great opportunity to step forward as leaders. We welcome and appreciate the calls to action set out in the report that give a clear direction and aspiration for insurance, finance, regulators and government. Stepping forward together gives us the best chance to deliver impact at a scale commensurate with the accelerating climate crisis.
To share climate risks at scale, they must be measured consistently. Within risk-sharing systems, the insurance sector (premium-based risk-sharing) has unique risk quantification and management skills, overseen by regulation. The report proposes these approaches spread across wider financial regulation, from microfinance to global financial institutions, to achieve a climate-smart financial system.“
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