Climate change is happening faster than anticipated. It is an interconnected, systemic problem requiring integrated transition solutions across industry sectors and businesses. Climate change links to concrete physical risks but also secondary perils like business interruption, material scarcity and supply chain issues. In 2023 there was US$380 billion in economic losses from global natural disasters with just US$118 billion insured.
In this report, by Deloitte and Aon, we highlight the key role of insurance in mitigating climate change and enabling the transition. We look at the critical role commercial risk solutions can play in de-risking projects across the wider economy and accelerate the sustainable transition to a shared low-carbon future.
Our findings are based on interviews with 30 international experts from shipping, energy, infrastructure and building materials sectors; as well as insurers and reinsurers, concerning the role that the insurance market can play in migrating businesses to a low carbon future.We identified four transition challenges that may hinder risk (transfer) solutions in facilitating the climate transition:
We discuss each of these challenges in the report but ultimately, we believe that the risk (transfer) solution industry is a critical enabler of the climate transition, one that can prevent inadvertent delays in the global shift towards a low carbon future. It is therefore becoming increasingly important to think of ways to combine risk, engineering, and financial acumen to better manage the risks associated with climate change.
We encourage you to reach out to further discuss the findings within this report and how it applies to your business.