INTERVIEW: ANNE LOHBECK, SWISS RE
Take the lead on the green transition’s emerging risks
Re/insurance underwriters have a bigger role to play in driving the green energy transition in the right direction.
Re/insurers have a huge opportunity to bolster the transition to “green” energy by leading on this emerging risk rather than just being a risk transfer body, says Anne Lohbeck, chief underwriting officer specialty at Swiss Re, in a call to action for the whole industry.
This transition to green infrastructure and renewable energy is causing major shifts in the risk landscape.
In this area of emerging risk, which for Lohbeck sits in the specialty line of engineering, exciting developments are afoot as industries such as solar power, offshore wind and related energy storage require investment in the electric grid infrastructure to maintain growth momentum.
However, she says: “These are emerging technologies and some of the players that supply the technology are struggling. They’ve put out technologies very quickly, and need to keep up with managing the risk around that.”
Renewable energy by nature is not at the same level on the experience curve as some of the more traditional energy solutions, she says. This is important when underwriting because re/insurers need to continuously invest in their own knowledge of these emerging technologies.
“We need to look to other parts of the market that have faced similar challenges and are further along,” Lohbeck adds.
She points to her Swiss Re energy underwriting colleagues in the marine space. In this line, she says, the safety and risk management practices are much more developed.
“There’s a learning opportunity to take some of the protocols, some of the ways of looking at things, across to green energy transition risks.”
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“You need to keep a sharp pen in underwriting.”
Anne Lohbeck, Swiss Re
The market players with the highest rates of investment into green energy are actually the traditional non-green energy players, she says.
With this investor mix in mind, she says: “There’s a real call to action here for us as an industry to make sure that we help to underwrite that transition—that we support our clients who are themselves in the middle of that transition and keep on contributing to help them make their book greener, rather than taking the approach where we simply exclude them.
“We need to take into account where we are, and help and incentivise and facilitate that transition.”
Global cooperation
Lohbeck says that Russia’s invasion of Ukraine in 2022 brought with it a different way of thinking about where national interests are at play, and where there is global collaboration and global supply chains.
“In some of the renewables markets, regulators and governments are promoting technologies that are home-grown. History shows that we’ve progressed most quickly technologically where we’ve had that flow of information, with global collaboration and exchange,” she says.
“But at the moment geopolitical influences are much stronger than in prior years.”
Such geopolitical influences also affect green energy investments. For example, in EMEA there has been a strong push to subsidise photovoltaics, but some areas are prone to hail, and maybe even more so with climate change, Lohbeck says. In such cases, the question is whether these initiatives, which are driven by well-intended governmental policy, are actually the most efficient thing.
“We have a role to play in the actual risk engineering, prevention and management.”
“From an insurance standpoint, we have to stay true to the risks that we’re underwriting and cost adequately, and not be carried away by looking at what is the right thing to do from a societal perspective. You need to keep a sharp pen in underwriting.”
Re/insurers can drive better risk management in the green energy transition by being more joined up within their own companies, she adds. Historically, re/insurers have come at this emerging risk from different angles and with different teams because of where lines of business and certain exposures are underwritten.
“The first thing we need to do is connect these different teams and ask each other: ‘why do you go about underwriting in this way in this market?’.
“There are some healthy connections to be made, to exchange best practice on how we look at things,” she says.
Referring to “sobering” loss ratios from the first few years of underwriting renewables, she urged re/insurers to discuss realistic expectations of what it takes to mitigate and transfer these emerging risks with their clients. The industry can also invest more in risk management to ensure that it has the insight it needs, she says.
“Re/insurers need to be mindful that with these emerging technologies, we have a role to play in the actual risk engineering, prevention and management rather than just being a financial transfer body that acts on a more abstract level,” she concludes.
Anne Lohbeck is chief underwriting officer specialty at Swiss Re.
Images, from top: Shutterstock / fokke baarssen