Submitted by H. Hutton on Thu, 02/03/2017 - 14:51
16 December 2015 – Speech by Maurice Tulloch, Chief Executive Officer, Aviva UK General Insurance and Chairman of ClimateWise.
This is a speech given by Maurice Tulloch, Chief Executive Officer, Aviva UK General Insurance and Chairman of ClimateWise. The speech was given at the Energy and Climate Intelligence Unit event, hosted by Aviva London, which marked the launch of ClimateWise’s Annual Review 2015. The text is given as a reference for ClimateWise members and does not necessarily reflect the views or position of ClimateWise or the University of Cambridge.
All eyes have been on Paris and France over the past few days. And a very great Parisian and one of the finest writers of the Enlightenment captured how I feel about the agreement that was reached. That was Voltaire – who attributed authorship of the aphorism: “don’t let the perfect be the enemy of the good”. Does Paris deliver everything we would like? Is it perfect? No. Could it mark an extraordinary moment in global history – and for our shared future? Absolutely.
I’m here today wearing several hats. As Global Chairman and CEO of Aviva’s UK General Insurance Business – but also as Chairman of ClimateWise, the insurance industry’s body on how we’ll tackle climate change – and the ClimateWise Principles themselves represent an important part of the industry’s response about climate risk from growing concern from investors and regulators. And with each of those hats I welcome Paris 2015 – and I welcome the hundreds of commitments made in addition to the final text by countries, companies and civil society as a whole.
We know the facts – in fact Aviva sponsored research published earlier this year which attributed the value at risk of unchecked climate change – roughly speaking the value of global assets – to be up to $13.8 trillion for investors and $43 trillion for governments if temperatures rise by 6 degrees – with a trillion meaning an eye-watering eleven zeros. And for insurers plus 4 degrees means insurers have to bow out. We can’t cover the risk. As it is, only around a quarter of natural catastrophes are covered by insurance. That means around three quarters aren’t. And the cumulative cost of just the insured damages linked to natural disasters between 1988 and 2011 is estimated to be £12bn. You can do the maths for uninsured losses. Climate change would be the greatest market failure of all time, the greatest inequality of all time, and it will represent a social catastrophe.
We will all have seen the footage of the floods in Cumbria and what it means for thousands of homes and families. I was there yesterday – and it is devastation. Aviva teams have been at the sharp end to get people back on their feet as quickly as possible. You will also have seen the devastation caused by the floods in Chennai. 280 dead. Key industries knocked out – with potentially serious knock-on consequences for supply chains right around the world. Three million without food and clean drinking water – and the crisis exacerbated by low insurance penetration amongst those affected. That’s going to make it that much harder to get people back up on their feet.
Paris maps out the way forward. Bad stuff is always going to happen – but we now have the prospect of a future in which bad stuff dominates – but is mitigated. But as we all know, having a map or the best strategy in the world is one thing. Delivering it is another – and we’ve got to continually remind ourselves that Paris is the floor not the summit of our ambition.
You might have noticed that this area of the City is full of construction sites. Well, now is the time for us to don our metaphorical hard hats. We’ve got get building on the commitments made, whether they are aspirational or operational – and then go above and beyond them. I’m sure that everyone here will ratchet up what they want to achieve – and that’s certainly true of Aviva – and deliver the goals Paris has set. We are proud to be one of the earliest signatories to the Paris Pledge for Action, published this morning. And that follows our commitments as a responsible investor. Earlier in the year we published our response – which is about tackling climate change by preventing it happening; our Chief Responsible Investments Office, Steve Waygood will fill in the detail [1]. And on the ground – in places like Cumbria – we’re going to work with our customers on prevention. In my book, prevention is the future for insurance – and it’s far better for us and for our customers than trying to make things better after the damage has been done.
Prevention. Perhaps that should be the word uppermost in our minds as we work out how to respond to Paris today – whether that’s big ticket strategic decisions by business and government. Or prevention by each one of us as responsible citizens. Paris could be our game changer, an epoch making moment – when the world made the right choice. Because when it comes to climate risk, making the right choice is more than a moral choice. It’s the only choice.
[1] Read some of Steve Waygood's speech at this event, about the importance of climate-resilient investments.
