EDITOR’S LETTER

Be part of the solution to climate change

“The innovation and entrepreneurial mindset needed to tackle climate change would be impossible without insurance.”

As the industry gathers in Denver for the annual the American Property Casualty Insurance Association (APCIA) conference, delegates will initially enjoy the novelty of meeting clients, friends and peers in person again. It has been too long for an industry built on relationships.

Once this wears off, however, the reality of the many headwinds the industry faces will quickly take centre-stage in the conversations at the conference—both on stage as part of the official agenda and offstage during coffee breaks and dinners.

Climate change is a massive challenge that the industry is already grappling with on many fronts. It is a lot more complex a challenge than many realise: increased frequency and severity of certain cat events may well be the tip of the iceberg for the industry—and there will be many more challenges to consider.

Depending on the trajectory of climate change, a dynamic partly determined by the climate conference COP26 in the UK this week, there could well be economic disruption and turbulence on a scale not previous considered. Entire industries will be winners—and some will be losers. Many businesses will need to change their business models: adapt or die, in other words.

Equally, as investment into “green” technologies and renewable energy increases, a new phase of innovation will create challenges and opportunities—amid disruption and change lies uncertainty and the associated risks that go with that.

But that is, of course, what this industry does best. It assesses uncertainty, quantifies the associated risk and puts a price on taking that risk on. That service is, as everyone reading this will know, central to the smooth running of economies. The innovation and entrepreneurial mindset needed to tackle climate change would be impossible without insurance.

If only everyone else understood that. It seems remarkable that the industry remains under attack from so many fronts, from those who misunderstand its core purpose. As David Sampson, CEO of APCIA, stressed in this newsletter yesterday, the “sanctity” of insurance contracts and the principles of risk-based pricing continue to be threatened by regulatory and legislative initiatives in the US.

APCIA is leading the way in rebutting such challenges. The launch of its new campaign at this event, “Insuring what matters most”, encapsulates what the industry is all about.

Increasingly, what matters most to many, in a very real way, is climate change. The industry must be seen as being proactive in this regard too—part of the solution, not the problem.

Wyn Jenkins is the managing editor of Intelligent Insurer

Image: shutterstock.com / New Africa