Insurers can help to reduce risk and mitigate the effect of climate change by requiring customers to make their homes and businesses more resilient, according to a specialty insurer focusing on Africa.

Raveem Ismail, who took part in the Bermuda Climate Summit earlier this year, says insurers have a major role to play.

Ismail, the head of parametric underwriting at Africa Specialty Risks (ASR), which has a Bermuda reinsurer, says people in Africa are often the victims of climate change, despite having little responsibility for it.

Nonetheless, insurers can play a part. He says providers of renewable energy can now get protection from ASR which protects them when the market price of energy drops below the cost of production, among other programmes.

In a video interview with Bermuda:Re+ILS, he says insurers can also help to mitigate the risk.

“There is long-term resilience being introduced by the entry of the insurance sector.”

“In Southeast Asia, insurers are insisting that their payouts, whenever claims are made, are put towards better building codes,” he says.

“That’s just one example of how insurers can help, whether it’s incentivising policyholders via reduced premium to become a better risk during the lifetime of the policy or indeed after a claim. This is a nudge the insurer can give, while it is difficult for any other sector today,” he adds.

“It’s often just a case of connecting them to capital markets. Once that’s done, the insurers have a vested interest in making sure those conservation efforts and other attempts at resilience succeed, and that those doing the work on the ground can see it’s not a voluntary or pointless activity.

“There is long-term resilience being introduced by the entry of the insurance sector.”