Understanding how the insurance industry can collaborate with cities to enhance climate resilience.
Launched in 2016, Phase II of the Urban Resilience project seeks to further develop understandings of resilient zones by investigating ways that the insurance industry can support urban resilience by leveraging their existing capabilities across their value chain. It focuses specifically on property development and infrastructure investment in urban areas.
By matching assets to liabilities, the insurance sector supports the efficient allocation of capital and contributes to the financing of assets that underpin the wider economy (e.g. infrastructure investments). The long-term involvement of insurance also helps to diversify the financial system and reinforce its own resilience to climate risks.
However, there is a growing gap between the underwriting and investment side of the insurance industry that needs to be closed if capital flows can be redirected in support of climate resilience. The Bank of England, for example, recently noted a potential timing mismatch between one-year insurance contracts and long-term real estate investment, which could become increasingly exposed as insurers continue to re-price risk annually, or possibly withdraw insurance cover altogether.
Through this project ClimateWise seeks to gain greater understanding of the current value chains within the insurance industry and how opportunities arising from urban resilience could be realised by the industry.
