“The development of longer-term partnerships between businesses and insurers, along with cross-sector planning and collaboration, is now essential to ensure sufficient capacity and coverage will be available”, the report said.
This is because, according to the report, there has been an investment of $19tn in the climate transition, “through to 2030”.
“Deploying these funds on the development, construction, and operation of climate related infrastructure and technology will require additional insurance coverage for up to $10tn of this investment,” the report said. This would ensure that “widespread market disruption” would be avoided and the transition to net zero would be a resilient one.
“Achieving net zero and climate resilience with adaptation strategies is an unprecedented challenge for all economies. Without sufficient insurance to de-risk markets, a smooth transition will be impossible,” BCG managing director and partner Lorenzo Fantini said.
“Insurance is an engine for collaboration”, as well as a social structure and economic ecosystem that brings together different interests to release economic potential “in a way that would simply be impossible if everyone acted alone”, the report said. It also cited the role of insurance as “a crucial nexus for governing and managing risk, offering a foundational level of security”.
“Insurance is the financial bedrock needed to de-risk investments and attract the additional capital necessary to mobilise the climate transition,” Howden CEO, climate risk and resilience Rowan Douglas said.
“The inevitable changes that the climate transition will bring will impact both the availability of insurance and the level of demand. Traditional approaches that fail to adjust to this new reality will leave buyers scrambling to adapt when change arrives.
“To avoid this outcome, businesses should start thinking strategically about how insurers can support them in this new world, and about how the insurance market must innovate and reform to make that possible,” the report said.
Source: asiainsurancereview.com
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