The re/insurance industry can lead in climate change solutions: Aon’s Case

The re/insurance industry has a unique opportunity to have a transformative impact in the face of climate change—but needs to come together to achieve this, scaling concepts it has already proved can work.

That was the message of Aon chief executive officer Greg Case (pictured) speaking at a PwC briefing in Monte Carlo yesterday. He highlighted the issue of volatility and the size of the challenge currently faced by the market—and emphasised how well the re/insurance industry is equipped to rise to this challenge.

“We know the challenge is monumental,” he said. “But equal in magnitude is the opportunity to have an impact in a way we’ve never had before. Standing before our industry is a generational opportunity for us to make a difference in the global economy.”

Case added that success is not guaranteed, but that re/insurers have a chance to define the relevance of risk capital for the next 30 years. He said that climate change must be a priority—and would drive the largest relocation of capital in history.

Pushing against this is the defensive posture of the industry. He cited conversations with clients who repeatedly say that the industry is leaving the playing field at a time when these risks are on the rise.

“We should navigate that and get bigger—instead, we are getting smaller,” he said.

Companies have complained about exclusions, climate-related triggers, and the re/insurance industry exiting different geographies.

Case said: “They say: ‘Your industry is taxing the transition, making it harder for me to go to zero carbon’. This defensive posture limits our ability to have an impact in a meaningful and substantial way.”

He believes the only path forward is to accelerate and scale the industry’s impact.

“That requires all our capabilities, and it requires we collaborate on a scale we have never achieved before,” he said.

He cited examples where the industry has stood up and faced into risk that was seen as “toxic”: in the last great recession, when the mortgage sector, particularly in the US, was in crisis, the re/insurance industry made the crucial difference.

“Our industry leaned into US mortgage at a time when no one would touch it—we brought content, insight, analytics and helped US mortgage understand the volatility differently, and we brought capital into US mortgage,” he said.

He referenced industry support for carbon sequestration projects; the use of cat bonds to encourage investment protecting against climate change; and the valuation and insurance of intellectual property to support “greentech” accelerators.

The only way forward, Case said, is for the industry now to scale these types of solutions.

“We have companies with issues that we’re not addressing. That’s going to continue—the question is, how do we break that trend, and who breaks it? Why not us?

“Capital movement on this topic changes everything—the impact we have as a business, as an industry, at a client level, and at a society level,” he concluded.