The Role of Actuaries in Addressing Environmental and Climate Changes
Actuaries play a crucial role in assessing and managing risks posed by environmental and climate changes, aiding the insurance industry in mitigating these challenges. They consider long-term risks with significant financial implications, such as physical, transitional, and liability risks. Actuaries also explore how to integrate Sustainable Development Goals (SDGs) into their work, supporting resilience to environmental risks through various levers available to insurers.
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Presentation Transcript
Environmental and climate changes: the role of actuaries Louise Pryor 30 January 2018 1
Outline Environmental and climate change background The risks and how they affect actuaries What the insurance industry can do 30 January 2018 2
Global risks 30 January 2018 3
Top 10 30 January 2018 4
Climate change means changing weather Source: IPCC AR5 SPM 30 January 2018 5
Theres more weather than there was 30 January 2018 6
Actuaries Climate Index www.actuariesclimateindex.org 30 January 2018 7
Long term risks ..with significant financial implications Physical Transitional Liability 30 January 2018 8
IFoAs actions Resource and Environment Board Research, working parties... Consultation responses Newsletter Risk Alert PRI network supporter Sustainable Development Goals 30 January 2018 9
Risk alert 30 January 2018 10
How do actuaries consider the SDGs in their work? How do the SDGs affect actuaries? How can actuaries help meet the SDGs? 30 January 2018 11
The role of insurers How insurers can support resilience to environmental risks https://www.cisl.cam.ac.uk/publications/sustainable- finance-publications/investing-for-resilience 30 January 2018 12
Insurers have levers Investment portfolios Financial markets Underwriting Marketing Expertise CSR / ESG How can they use these levers to support resilience? 30 January 2018 13
Investment portfolios Investments that directly enhance resilience There s often a problem with financial returns Invest in resilient assets Help to kick off virtuous circle via increased demand Invest in corporates whose business is to enhance resilience Improve their own resilience Avoid risk accumulations 30 January 2018 14
Financial markets Investment in resilience produces significant economic returns ... spread over a wide range of beneficiaries ... emerging over the medium to long term Innovative funding mechanisms Green bonds Impact bonds Forest Resilience Impact Bonds 30 January 2018 15
Underwriting Is resilience reflected in the premium? Do lower premiums provide incentive for investment? Are insurance incentives aligned with resilience? Resilient reinstatement Multi-year policies Comprehensive resilience services 30 January 2018 16
Marketing Education Investment mandate Premiums4Good (QBE) 30 January 2018 17
Expertise Green Cities platforms Urban infrastructure investments for the private sector Stakeholder partnerships with cities Staff secondment 30 January 2018 18
CSR / ESG Land management projects Living Lands project (Santam) Mangrove planting (Tokio Marine) Education Protecting the North (Suncorp) Pressure from investors and others? Aiming for A ClientEarth, Urgenda 30 January 2018 19
Summary Environmental and climate change risks are serious They have significant long term financial implications Actuaries should treat them in the same way as other risks The insurance industry can contribute to societal resilience 30 January 2018 20
