The insurance industry today launched a major initiative to help tackle climate change and encourage consumers to be more environmentally friendly, which could lead to the introduction of more "green" insurance policies.
A group of global insurers, reinsurers and brokers has developed a set of ClimateWise principles that aim to do everything from reducing the environmental impact of their own businesses to rewarding customers for cutting their greenhouse gas emissions
A group of global insurers, reinsurers and brokers has developed a set of ClimateWise principles that aim to do everything from reducing the environmental impact of their own businesses to rewarding customers for cutting their greenhouse gas emissions
Climate change is predicted to lead to an increase in extreme weather events, which could cost the insurance industry dear. This summer's floods in the UK are expected to result in a bill in excess of £3bn.
While the incidents may not be a direct result of climate change, such events, and subsequent costs, are likely to become more common.
The group claimed the ClimateWise principles would enable companies throughout the world to build climate change into their business operations.
This could result in more insurers offering lower motor insurance premiums for those who drive hybrid cars, such as those offered by More Than and CIS.
Home insurers will also encourage people in areas at risk of flooding to repair their homes in a more flood resistant way, such as by putting in concrete rather than wooden floors.
High-risk insurance
The Association of British Insurers (ABI), which is launching the principles at a conference on climate change today, said this would enable insurers to continue making home insurance more widely available in high-risk areas.
It said its latest research among consumers had shown that half of homeowners wanted climate-friendly and climate-proof insurance, while four in 10 wanted climate-friendly car cover.
However, only 1% of consumers currently buy cover that rewards green behaviour, suggesting work is needed to attract them to this type of product.
The principles laid out today also commit firms to incorporating green issues into their own investment strategies, and encouraging the companies in which they invest to adopt climate friendly behaviour and disclose their greenhouse gas emissions.
Insurance companies currently hold just under a fifth of all investments in the London Stock Exchange, giving them considerable financial muscle.
Insurers will also be taking the lead in analysing the risk of climate change, looking at the increased chance of flooding and the possibility that severe droughts in the south of the country could lead to more deaths.
The ABI said it would be sharing its research with scientists, business, governments and non-governmental organisations, and supporting work to set and achieve national and global emissions reduction targets.
An independent audit will also be published on an annual basis to assess how the industry is doing.
Princely connection
The ClimateWise principles have been developed by an ABI working group and the Prince of Wales's Business and the Environment programme.
Peter Hubbard, chief executive of AXA Insurance and chairman of the working group, said: "The responsibility for addressing global warming rests with us all, and will require co-operation and agreement among individuals, businesses and countries."
He added: "ClimateWise demonstrates the importance the industry attaches to this challenge. The principles set a framework for us taking up this exciting challenge of changing behaviour, raising awareness and encouraging new ways of working."
In a report also out today, F&C Asset Management said insurers needed to wake up to the risks of climate change.
The investment group said the magnitude and frequency of extreme weather events such as hurricanes, floods and fires looked set to increase as a result of climate change, and this would put insurers in the "eye of the storm".
But it claimed some insurance companies had been slow to act and urgently needed to develop climate change strategies.
Co-author of the report, Vicki Bakhshi, said: "By acting now the insurance industry can play a key role in shaping and financing the solutions to climate change.
"Insurers can work with governments and regulators to get the right conditions in place, both to maintain a healthy insurance industry and to help society cope as climate change hits home."
While the incidents may not be a direct result of climate change, such events, and subsequent costs, are likely to become more common.
The group claimed the ClimateWise principles would enable companies throughout the world to build climate change into their business operations.
This could result in more insurers offering lower motor insurance premiums for those who drive hybrid cars, such as those offered by More Than and CIS.
Home insurers will also encourage people in areas at risk of flooding to repair their homes in a more flood resistant way, such as by putting in concrete rather than wooden floors.
High-risk insurance
The Association of British Insurers (ABI), which is launching the principles at a conference on climate change today, said this would enable insurers to continue making home insurance more widely available in high-risk areas.
It said its latest research among consumers had shown that half of homeowners wanted climate-friendly and climate-proof insurance, while four in 10 wanted climate-friendly car cover.
However, only 1% of consumers currently buy cover that rewards green behaviour, suggesting work is needed to attract them to this type of product.
The principles laid out today also commit firms to incorporating green issues into their own investment strategies, and encouraging the companies in which they invest to adopt climate friendly behaviour and disclose their greenhouse gas emissions.
Insurance companies currently hold just under a fifth of all investments in the London Stock Exchange, giving them considerable financial muscle.
Insurers will also be taking the lead in analysing the risk of climate change, looking at the increased chance of flooding and the possibility that severe droughts in the south of the country could lead to more deaths.
The ABI said it would be sharing its research with scientists, business, governments and non-governmental organisations, and supporting work to set and achieve national and global emissions reduction targets.
An independent audit will also be published on an annual basis to assess how the industry is doing.
Princely connection
The ClimateWise principles have been developed by an ABI working group and the Prince of Wales's Business and the Environment programme.
Peter Hubbard, chief executive of AXA Insurance and chairman of the working group, said: "The responsibility for addressing global warming rests with us all, and will require co-operation and agreement among individuals, businesses and countries."
He added: "ClimateWise demonstrates the importance the industry attaches to this challenge. The principles set a framework for us taking up this exciting challenge of changing behaviour, raising awareness and encouraging new ways of working."
In a report also out today, F&C Asset Management said insurers needed to wake up to the risks of climate change.
The investment group said the magnitude and frequency of extreme weather events such as hurricanes, floods and fires looked set to increase as a result of climate change, and this would put insurers in the "eye of the storm".
But it claimed some insurance companies had been slow to act and urgently needed to develop climate change strategies.
Co-author of the report, Vicki Bakhshi, said: "By acting now the insurance industry can play a key role in shaping and financing the solutions to climate change.
"Insurers can work with governments and regulators to get the right conditions in place, both to maintain a healthy insurance industry and to help society cope as climate change hits home."
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