ILS
How Bermuda can become a climate finance behemoth
With climate change jumping to the top of the agenda in the re/insurance world and beyond, Bermuda is well placed to become a leading voice in the push for sustainable finance, says Greg Wojciechowski of the Bermuda Stock Exchange.
“Apart from the obvious risks to health and biodiversity, climate change entails significant financial risks to businesses and governments.”
Greg Wojciechowski, BSX
There is perhaps no industry set to be more directly affected by—and yet so intimately familiar with—the nature of climate change and its impact on the environment than the re/insurance market.
For decades, it has been the business of the industry to accurately price and predict the financial impact of extreme weather events and help buttress the global economy against the threat of natural catastrophes and adverse conditions, spreading the risk of disaster using the market.
As the issue now rises to the forefront of the public and corporate consciousness, how can the industry in Bermuda take up the challenge—and opportunity—of providing financial solutions to the problem?
Bermuda Stock Exchange (BSX) president and chief executive officer Greg Wojciechowski believes that the Island has all the attributes necessary to become a global hub for climate finance.
One major factor behind this thinking is the natural fit of the re/insurance industry with the issue, given its historic expertise and experience. With Bermuda’s reputation for financial innovation, it is well-placed to grasp the opportunities available in the coming years.
“Climate finance is something that is such a big topic, even in my own space. Whether it’s being discussed politically by large countries, or whether it’s on the capital market side, it clearly falls in the wheelhouse of insurance,” Wojciechowski told Bermuda:Re+ILS.
“Because of its longevity and experience, Bermuda is going to be well positioned to become a ‘centre of excellence’ for innovative products that help to address the risks associated with the impact of climate change.
“These products provide community resilience and support during rebuilding after devastating events. With our understanding of atmospheric and weather-related catastrophic events, it’s going to lend itself as the platform for helping to provide solutions going forward.”
“Climate change is giving rise not only to the world’s biggest societal challenges but also to some significant investment and business opportunities.”
Fresh thinking
Wojciechowski added that the global experience of coordinated societal effort from the COVID-19 pandemic has sharpened minds to focus on some of the larger problems facing different economies. It could help the development of initiatives to tackle climate change, in both the political and the business spheres.
“Apart from the obvious risks to health and biodiversity, climate change entails significant financial risks to businesses and governments. The corporate world is now focused on how to mitigate those ever-increasing risks and how to cope with a related event when it occurs,” he explained.
“There has been tremendous societal resilience in reaction to the pandemic. The last couple of years has sharpened our focus on the impact that a global event can have on our daily lives.
“With respect to climate change, it’s becoming more evident that it’s not a question of if, but rather when and how, severe environmental changes will influence our lives. The world is taking the threat much more seriously,” he added.
The issue needs to be addressed as a matter of public concern, and it provides a host of opportunities for companies and investors to rise to the challenge. There are plenty of incentives for companies and individuals to come up with solutions to the many financial issues that climate change poses.
“Climate change is giving rise not only to the world’s biggest societal challenges but also to some significant investment and business opportunities. The scale of climate finance-related requirements which could be mitigated by well-structured investment reaches into trillions of dollars,” he concluded.
