COP21 Action Day: Insurers join forces to advance climate resilience through new initiatives

"I am very pleased about the momentum that has started to build up in the international community to bolster financial resilience against natural disasters and to empower governments, and other public sector administrations, to manage risks better", said Swiss Re's Group CEO Michel M. Liès, at the COP21 Action Day in Paris, on Saturday 5 December.

Speaking at the Protect the Planet session and later at the launch of the new G7 InsuResilience, initiative, Liès underlined Swiss Re's longstanding commitment to advancing climate resilience. This includes the milestone UN commitment Swiss Re made in September 2014, to advise 50 governments on climate resilience by 2020, offering USD 10bn risk capacity for insurance solutions.

Michel Liès speaking at the COP21 Action Day, Protect the Planet:
"Climate resilience is everybody's business and by putting a price tag

on risk, insurance clearly has a role to play."

"By quantifying the economic impacts of weather and climate, insurance puts a price tag on risk and incentivizes investment in prevention measures. Insurance is therefore a material tool for strengthening climate resilience," he explained.

65% of weather and climate risk can be cost-effectively averted – but only at a 2C limit

"Case studies across the globe show that up to 65% of weather and climate risk can be cost-effectively averted. But these studies also indicate that such solutions will not work in a 4°C world – at least not at a reasonable cost," he continued. "To maintain the insurability of severe weather we need a framework for increased financial flows – public and private – into low-carbon and climate-resilient development."

"We also need to render our socioeconomic systems more resilient to large weather events – by managing risks with foresight and through collaboration. Only by working together, can we maintain and extend the boundaries of insurability and develop innovative solutions to further narrow the gap between economic and insured losses – on condition that we limit global warming to 2 degrees.

Transformative collaboration

"I therefore believe that initiatives like the G7 climate insurance initiative InsuResilience and the UN's new framework on climate resilience "A2R" to which the industry can contribute knowledge and financial capacity, can prove transformative in the broader effort to shape a more climate resilient world.

Liès also mentioned new collaboration platforms being added to Swiss Re's climate resilience arsenal. One is the Climate Insurance Fund, which was set-up by KfW earlier this year. The fund aims to scale up climate insurance schemes around the world, by investing in respective insurance and related service companies, and to provide technical assistance to the beneficiaries of those investments.

"The truth is that current insurance schemes – at all levels, from micro to macro, even across states, covering regions – currently cover only a fraction (order of 30%) of the financial and economic losses. Now's the time to move from pilots to full-scale implementation! To make it happen, the willingness and commitment of all actors is required. The global insurance and reinsurance industry has the risk modeling expertise and the financial capacity to absorb such risks. But the paradigm shift will also depend on the willingness and ability of governments to take control of their disaster risk financing, and a shift from risk-reaction to pre-disaster risk planning approach. In the end, it's a question of solidarity!"

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