Insurance able to act and be comprehensive on climate change: Axa’s Renaud Guidée
Euromoney, is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Insurance able to act and be comprehensive on climate change: Axa’s Renaud Guidée

London buildings green esg.jpg

Insurance can provide the “ability to act and an ability to be comprehensive” in the battle to halt climate change and reduce global emissions, according to Axa chief risk officer Renaud Guidée.

“Insurance obviously offers risk protection and risk management to clients by underwriting the provision of protection and coverage,” Guidée said in a Swiss Re insurance leadership COP26 panel. “We can actually help our clients decarbonise their portfolios.”

The panel was largely speaking from the perspective of the Net-Zero Insurance Alliance (NZIA), a group, launched in July, of eight leading insurers pledging to become carbon neutral by 2050.

Axa chairs the group, while Allianz, Aviva, Generali, Munich Re, Scor, Swiss Re and Zurich are members. However, Guidée added that new members joined last month.

“We’ve added members from Africa and from Asia, and we’ve had many people banging on the door with whom we are having an active dialogue,” he said.

Meanwhile, the classic notion of insurance is now being questioned more than ever, according to Butch Bacani, programme leader for the UN environment programme’s Principles for Sustainable Insurance (PSI) initiative.

“Now, [the notion of insurance] is being questioned,” he said. “What are you insuring? Are you insuring assets that are damaging the environment? Are you insuring in a way that violates human rights? We need to start repositioning what insurance and reinsurance is all about.”

To achieve this, underwriters will need a lot of training, said Thierry Léger, chief underwriting officer at Swiss Re.

"They will have to understand, they will have to have clear measures given by the companies, so they actually know what they have to look for, and this is going to evolve as we learn more from it,” he said.

Axa’s Guidée noted a tendency within the industry to exclude some of the most carbon-intensive companies from their portfolios.

If an insurer wants to have an impact at scale, however, it should focus on company transition and helping clients shift to low-carbon practises rather than simply acting as an “excluding machine”, he said. If a carrier simply excludes a company due to its carbon practises, “somebody else can step up”.

He also emphasised the importance of focusing on larger corporates, as, due to their size, they have a much “greater impact on climate change and global warming”.

The UN’s Bacani added to this and said climate action involving the insurance industry should not simply be about “putting a thermometer in your insurance portfolio and saying ‘it's 1.5 degrees’, but nothing happens in the real world".

“What has to happen is that, whatever insurers do in managing their underwriting portfolios, it has to lead to emissions reductions in the real economy, in the way clients behave,” he said.

He also cited opportunities for underwriters in future risk pools that will need to be insured in a more climate-sensitive world.

“This is not simply [insuring] new technologies and renewables or battery storage,” he said.

“This is also about nature-based solutions," he said, noting coral-reefs and mangroves. "There's a lot of upside opportunities there we need to really accelerate on.”

The UN representative also argued that insurers must “practise what they preach” if they want to be credible in the eyes of clients, the industry and wider society.

“This is not simply an argument of being holier than thou, in terms of your clients,” he said.

“You need to practice what you preach because credibility is important in this agenda.”

More Content Like This

Reinsurance and ILS is ‘still in its infancy’ in understanding climate change’s impact on catastrophe risk.
Continued support for fossil fuel-producing clients will remain a bedrock of energy insurance underwriting for some time to come as the insurance market looks to shift towards environmentally friendly underwriting, market participants have told Insurance Insider.
Joachim Wenning said the financial sector would play a crucial role in the “very, very costly” energy transition.
Swiss Re’s group CUO Thierry Léger has explained to Insurance Insider the rapid progress insurers need to make in the next decade, adding that “every year counts”.
Gift this article