A new G7 Initiative on Climate Risk Insurance was presented at the recent G7 Stakeholder Conference on Climate Risk Insurance: “Reducing risks, insuring losses, increasing resilience”. UNEP reports that climate-induced and other natural disasters have caused average economic losses of around US $190 billion annually in the last decade, with average insured losses of around US $60 billion – making climate risk insurance and reducing risks through increased resilience a globally significant issue.
The Initiative aims at increasing the resilience of developing countries against climate-induced and other natural disasters. For example, the Initiative has the ambition of increasing access to insurance to as many as 400 million additional beneficiaries by 2020. Hopes are also high for the G7 Initiative to harness the full potential of the insurance industry for the global sustainable development agenda, including its capacity as major investors in promoting a low-carbon and climate-resilient economy.
2015 presents a critical opportunity to include insurers into the core architecture of sustainable development for the coming decades. Acting as risk managers, risk carriers and investors, the insurers are uniquely positioned to reduce the risks of disasters, provide financial protection for the vulnerable communities, and enable resilience and environmental sustainability through their investments.
The G7 Initiative can inject fresh momentum into the international sustainability agenda through channels such as the Warsaw International Mechanism (WIM) for Loss and Damage associated with Climate Change Impacts, engaging in public-private collaboration to improve data collection, and supporting the international community’s risk reduction, financing and resilience-building efforts. It is also an important step towards enhancing the collaboration between national and international political institutions, and the insurance industry.
Efforts to attract greater engagement of the industry are underway, spearheaded by the UNEP Finance Initiative’s Principles for Sustainable Insurance (PSI) – the largest collaborative initiative between the UN and the insurance industry, with 80 members representing more than 15% of world premium and US $9 trillion in assets.
The PSI has already achieved tangible results, with the ‘United for Disaster Resilience Statement’ released at the opening of the 3rd UN World Conference on Disaster Risk Reduction in Sendai, Japan in March. The statement is a global commitment by the insurance industry to help implement the Sendai Framework for Disaster Risk Reduction. A separate, ongoing PSI initiative goes further and calls on insurance organisations to exercise leadership by making voluntary commitments that support the aims of UN global policy frameworks culminating this year, from the Sendai Framework to the UN Sustainable Development Goals through to 2030, and the global agreement on climate change. These industry commitments are concrete actions on risk management, insurance products, investment and partnerships that promote disaster risk reduction, climate change adaptation and mitigation, financial inclusion and sustainable investment.