COVID is no longer insurers' biggest worry — climate change is
Global warming is becoming a greater challenge for insurers as extreme weather events become more frequent.
(Bloomberg) — Climate change has returned to the top of the list of insurers’ biggest concerns as the vaccine rollout and gradual lifting of health restrictions see pandemic fears ease in many countries.
Global warming was ranked as the most significant risk to society over the next five to 10 years in a report released Tuesday, Sept. 28, by French insurance giant AXA SA. While that also topped the ranking in 2018 and 2019, it was outstripped by diseases and pandemics last year as the coronavirus spread across the globe.
“Climate change is back at the top of the agenda,” AXA Chief Executive Officer Thomas Buberl said in a statement. “This is good news since last year we feared that the explosion of health risks may overshadow the climate emergency.”
Insurers are being increasingly challenged by global warming as extreme weather events wrought by climate change are expected to keep rising. Just under a fifth of the 3,500 insurance professionals polled across 60 countries expressed faith in public authorities to mitigate the crisis.
AXA, which chairs the Net Zero Insurance alliance, is pushing the industry’s largest players to exclude polluting companies and focus on those with clear and credible transition plans, both in their investment and underwriting universes. The latter policy is even more powerful, Buberl said in an interview with Bloomberg TV on Wednesday, Sept. 29.
“On the investment side, we are one of many investors, and if you want to find funds for a coal factory today, you will,” Buberl said in the interview. But if a company can’t get insurance to protect against risk, then it won’t be able to secure investors, he said.
Cyber risks on the rise
The survey also found that cyber risks, which ranked second on the list, were a fast-growing fear for insurers. This year, some 61% of respondents put cybersecurity among their top five concerns, up from 54% in 2018. The pandemic dropped to third place.
“The pandemic and the lockdown have certainly accentuated the use of digital tools, and we insurers have seen that it has also intensified cyber risks and attacks,” AXA Deputy CEO Frederic de Courtois said at a press briefing with reporters.
— With assistance from Jonathan Ferro, Tom Keene and Lisa Abramowicz.
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