Insurance plays vital role in financing climate transition

A report published by broker Howden estimates that a total of 19 000 billion USD has already been committed to finance the climate transition by 2030. More than half of this amount, or 10 000 billion USD, would require insurance coverage. This means that companies will need to involve the insurance industry from the very beginning of their carbon-neutral transition plan to ensure long-term coverage.

Meanwhile, natural catastrophe insurance rates are expected to increase by 50% over the next five years, due to:

• rising losses due to climatic events,
• insurers' high exposure to climate risks
• governments transferring public debt to private markets.

The report also points out that, without insurance, companies would not be able to meet their decarbonization targets or combat the effects of global warming. Long-term partnerships between companies and insurers, as well as cross-sector collaboration, are now essential to ensure sufficient insurance capacity.