with contributions from Allianz, AXA XL, Liberty Mutual, Munich Re Specialty - Global Markets, Syndicate and Tokio Marine Kiln.
Howden is a London headquartered international insurance intermediary group, managing US$ 38 billion of premium on behalf of clients.
Insurance is rarely a top-line agenda item when companies engage in strategic planning. This is because insurance has been readily available for any significant business undertaking. Historically there has been convergence between the supply and demand sides of the insurance market.
Below we highlights 6 quotes from the study.
(1) The inevitable changes that the climate transition will bring will impact both the availability of insurance and the level of demand.
(2) Nothing gets financed ordinarily without insurance, but the financing of the largest capital expenditure of all time, the protection of nature-based solutions and expansion of new carbon and biodiversity credit markets, are being attempted largely without mobilising the power of insurance.
(3) The reality is that insurance capacity can no longer be taken for granted.
(4) New technologies and industrial processes carry risks and uncertainties that can inhibit the affordability of insurance.
(5) Natural catastrophes are already occurring with increasing frequency… more than $2 trillion in damages to homes, livelihoods, and economic potential caused by natural catastrophes in the last decade. The insurance industry’s lack of penetration into many of the most vulnerable markets means that less than half of these losses were insured.
(6) Over the last five years, insurers have seen losses from natural catastrophes exceed $100 billion annually, the highest figures ever recorded and more than double the five-year average from two decades ago.
These findings resemble with those from our two last posts, both about climate change pressure on insurers:
According to “The Bigger Picture” study, on top of US$ 19 trillion in investment already committed to financing the climate transition through to 2030, additional US$ 10 trillion of new insurance coverage will be needed to finance net-zero goals, especially aimed at the energy sectors, road transport and construction. By the way, the study indicates this additional need per continent.
Reference is also made to the 2023 study “Bridging the $18 Trillion Gap in Net Zero Capital” from the United States based Boston Consulting Group.
it is also estimated that insurance premiums related to protection against natural catastrophes increase by 50% by 2030, reaching between US$200 and 250 billion.
And three further key factors will drive this increase:
(1) increasing annual losses caused by climate events, accelerated growth exposures,
(2) disclosure of climate risks and
(3) government transfer of risk to private markets.
What can be done? Click below to download the 32-pages study “The Bigger Picture” and read for yourself.
Also to mention, earlier this year in January, Howden announced a first-of-its-kind insurance facility covering the leakage of carbon dioxide (CO2) from commercial-scale carbon capture and storage (CCS) facilities. According to the press release, “the global carbon capture and sequestration market is projected to reach a value of USD 7.49 billion by 2030 at a compound annual growth rate of 19.9% between 2023 and 2030, accelerating the need for effective insurance solutions to protect the financial viability and stability of CCS projects. Click here for more insights.
