skip to content

Cambridge Institute for Sustainability Leadership

With over US$35 trillion of invested assets, the insurance industry is one of the world’s largest institutional investors. The industry therefore has significant influence over the financial markets based on where it directs its flows of capital. Significant progress has already been made on how insurer’s asset management activities can support the transition to a low carbon economy. Less attention has been given to how the industry can use its financial assets to manage risk on the underwriting side of its business and manage the widening protection gap by enhancing physical resilience to climate risks.

 

Net zero underwriting

While many initiatives exist for alignment of investment holdings with science-based targets for the transition to a low carbon economy, there is limited support for insurers who need to align an equally significant book of underwriting liabilities with a net zero ambition. The centre of the initiative is a group of insurance industry firms committed to underwriting portfolios aligned to with a 1.5°C scenario, addressing Article 2.1c of the Paris Agreement. The network will create practices, tools and knowledge to build capacity and enable the insurance industry to make and act on the commitment. By aligning the key risk assessment and risk management of the finance sector with the Paris agreement, significant financial flows would be altered directly and through signals for change in the real economy.

The network would be convened by ClimateWise at the University of Cambridge Institute for Sustainability and look to collaborate with the Net Zero Asset Owners Alliance (NZAOA), UNEP FI PSI and engage with policy makers at key moments. The unique architecture of the insurance industry means the wider engagement of modellers, loss adjustors, claims managers, repairers and others connected to the underwritten policy, insured event and restitution process is also needed.

Independent evaluation of the potential aggregate impact to (re)insurers would also highlight the implications for risk management and capital regulation of (re)insurers such as in Solvency II. The recommendations from the research will be presented to the European Commission.


Climate product innovation

This paper explores the critical role of the insurance underwriting in enabling the transition of the wider economy towards decarbonisation. Opportunities to incentivise climate mitigation and support the growth of low carbon solutions exist in the design and pricing of policies, claims and the provision of risk advisory services. The industry needs to rapidly lean in to meet the existing risk transfer and advisory needs of clients’ decarbonisation pathways, to anticipate their evolving demands and needs and incentivise their transition.

Climate product innovation within the insurance sector (2021)

 

 

 


Investing for resilienceInvesting for Resilience (2016)

Investing for Resilience explores how the insurance industry can help to enhance investments in resilience. It focuses both directly, on insurer’s own investment activities, and how the industry can positively influence the financial markets more broadly. It highlights the need for a standardised resilience rating tool.

Investing for Resilience (2016)

 

 

 


Global Insurer Statement


ClimateWise, with The Munich Climate Insurance Initiative (MCII) and the United Nations Environment Programme Finance Initiative (UNEP FI), developed a joint statement in response to the IPCC 5th Assessment Report, supporting analysis that the effects of global warming are aggravating risk globally. The statement has become the foundation for supporting widespread action in response to society’s necessary transition to a zero-carbon, climate-resilient future.

Global insurance industry statement

Considering climate risk and opportunities for investment framework

 

 

 


Sustainable claims guidance


Launched at the 2012 Association of British Insurers’ Property Conference, this guidance document outlined a process to reduce the environmental impact of domestic property claims, applicable to all types of business.

Sustainable claims management report
Sustainable claims guidance