Modern Insurance Magazine Issue 60

ASSOCIATIONS ASSEMBLE
Dr Matthew Connell
Title: Director, Policy and Public Affairs
Association: Chartered Insurance Institute
(CII)
Industry
Influences on
Climate
Insurance does not touch on sustainability
as obviously as sectors such as aviation,
energy production, or even agriculture.
However, there’s probably no other sector
which interacts with the drive to net zero in
as many different ways as insurance does.
Insurers influence climate change through:
• Using their leverage as underwriters to ensure that
projects are built right first time. This is because
substandard construction is inherently unsustainable.
For example, buildings that are not resilient to
earthquakes or hurricanes in high-risk areas will have
a lifespan that is a fraction of that of a properlyconstructed
building.
• Sharing data and insights into developing risks, for
example giving advice to clients and governments
around evolving flood risks.
• Investing in a way that promotes sustainability, either
by investing in firms that are producing goods and
services that promote sustainability, or by taking
an active role in the governance of firms to prepare
them for the transition to a sustainable approach.
• Underwriting firms that produce new technologies.
For regulatory reasons, innovative firms sometimes
struggle to find cover because of a lack of a track
record. In turn, this threatens their ability to secure
credit. For example, mobility solutions based
on hydrogen have challenges around reserving
requirements because they are so new, despite
having significant advantages over other energy
sources in relation to sustainability.
• Resolving claims in a more sustainable way, either
by repairing rather than replacing new for old, or
replacing inefficient technologies with more efficient
technologies. Around 80% of the building stock that
will exist in 2050 already exists, so the actions of
insurers now will have a direct and irreversible impact
on the achievement of
climate goals.
Every part of the
insurance value chain –
broking, underwriting and
claims – is involved in the
drive to net zero. Without
insurance, we cannot
achieve sustainability.
Adrian Jolly
Title: Head of Strategic Development
Association: British Damage Management
Association (BDMA)
Collaboration in the
Climate Crisis
The British Damage Management
Association (BDMA) is the accreditation
body of choice for the UK damage
management and property restoration
industry sectors. The membership
demographic forming the BDMA comprises
of damage management contractors and
individual practitioners, insurance company
claims management personnel, loss
adjusters, and loss assessors.
There’s no doubt that global warming is having a
seismic effect on national and global weather patterns.
In the UK, we are experiencing more prolonged drought
periods, more extreme temperatures, and greater
incidences of both torrential and excessive rainfall.
The above means that the UK insurance sector faces
a significant increase in the number of surge events
that it is having to handle. Events of this nature can
cause substantial damage to buildings and contents;
domestic housing and commercial premises can all be
affected, causing extreme disruption and distress. Event
types include a greater incidence of fires, localised flash
flooding, regional and national flooding, and burst pipe
claims caused by low temperature extremes. Never has
resilience and contingent capacity planning been more
important and focused.
The wide variances in weather conditions and events
creates a ‘feast and famine’ situation for damage and
claims management practitioners alike. When it’s quiet,
it’s very quiet. However, significant work volumes
from surge events can cause excessive pressure on
resource, not just in terms of equipment, but in terms of
manpower too.
Whilst governments and industry are increasingly
imposing regulation and measures to slow the
effects of global warming, the horse may already
have bolted. There’s no doubt that communities will
continue to suffer from extremes of temperature,
rainfall, and drought.
Insurance companies
and their policyholders
will bear the brunt of
increased claims costs, and
in turn, the BDMA and its
members will undoubtedly
form an integral part of
the restorative response
required.
MODERN INSURANCE | 41