COP27: the role of the insurance sector in mitigating climate change
12 Dec 2022
Climate risk is steadily becoming a reality, and the world, including the Middle East, has been feeling the effects of extreme weather events and their impact on people and the economy. The region has witnessed several recent disasters, and temperatures have rapidly risen, pushing climate action to the top of corporate and government agendas.
This year’s United Nations Climate Change Conference, COP27, underlined the urgency of the environmental pressures facing our planet while, at the same time, presenting the need for tangible solutions towards achieving net-zero carbon emissions by 2050. How can the insurance sector play a role in building a more sustainable future that can mitigate the impact of climate change?
The insurance sector plays a key part in managing complex long-term risks, and so when it comes to facing the unavoidable long-term consequences of global warming, the industry has much to offer.
With in-depth expertise in risk management, insurers are well set to develop products that cover climate-related risks demanded by stakeholders, including customers, shareholders and regulators. The insurance sector has now entered a period of transition and is prioritizing the reassessment of its investment portfolios and corporate strategies to align with government agendas and requirements globally.
A key outcome of this transition is a better assessment of insurers’ ability to withstand extreme climate events, as well as more developed underwriting and pricing decisions to mitigate such exposures.
Insurers also have the unique vantage point of holding close relationships with clients and are therefore well-equipped to guide other industries in their journey through the net-zero mission. With green investments and climate-tailored insurance products, they can help support new technologies, clean energy initiatives and the adoption of sustainable practices for a positive impact on the environment and climate.