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💬 "Climate And The Insurance Industry"

Climate 21

Photo by Mika Baumeister / Unsplash

Table of Contents

Host: Tom Raftery
Guest: Peter Giger | Global Chief Risk Officer | Zurich Insurance
Category: 💬 Opinion

Podcast’s Essential Bites:

[2:17] “[Climate] is [affecting the insurance industry] through the exposure to various property risks. Although that's a bit of a blurred area, because don't forget weather beats climate each and every year. But the weather will follow climate in the long run unavoidably. […] The professional insurance very clearly see a trend with increased loss loads. And part of that is basically more extreme weather events, more frequent […] extreme weather events.”

[3:47] “Our job is to spread the risk, to diversify the risks, but we don't actually magically get rid of the risk. So if losses occur, losses will be kind of factored into next year's premium. And by that, ultimately, we're all paying for the increased loads.”

[4:15] “When we pay, it's actually too late. […] In each and every area of life, loss prevention is so much more effective than fixing the damage. And climate change is no different than that. […] Building the dam is much more effective than paying for the flood. So that's why resilience is a big theme for us. That's why we're working with our clients to help them increase their resilience. Because the best outcome is always always not to have a loss. Having an insurance paying for it is only the second best.”

[5:11] “Climate change is […] not a risk, we take it as a given. […] And so the risk around is how it will exactly look like. How big will the […] impact be? How much global warming are we going to see? At what stage can we manage it? When do we get it under control? What are the transition effects? What's the impact, for example, on biodiversity? Will some of the ecosystems break? Because we all know that ecosystems don't show a linear deterioration pattern, they show cliff patterns, and at one stage, they'll fall over the cliff. And it will be very hard to bring them back. And all of these things are risks on the transition path.”

[8:33] “Since the beginning of the various industrial revolutions our economies were principally carbon based. Now, even before climate change became the big issue, it was clear that that was non sustainable behavior, because we all knew that there was only so much oil […]. […] The peak oil discussion wasn't driven by climate concerns, but economic concerns. Now, I think all we need to do is to recognize that a carbon economy is not sustainable and accelerate the development. And it will need technological change. It will need changing behaviors. […] And as a company, […] if you're not positioned to kind of benefit from the next wave of strategic development, you become irrelevant.

[12:42] “[To have a successful transition] I think we should do interestingly enough, what we've very successfully done about the vaccines in the COVID crisis, where we set out the price and said, […] go figure it out. And hundreds of attempts were started. And a few were very successful, most of them actually failed. And I think the problem is the same here. We should incentivize people to go find new technology by giving them the certainty that they’re relevant in the future. And I think the best way to do that is to put a price on carbon consumption. Because through that, through price signals, the market will start to think about alternatives very easily.”

[23:51] “[The biggest impact of climate change is that] we are going to lose large areas of land. And so people will move. So we're going to see mass migration in a way that we haven't seen or thought about. And I think that's fundamental. It will turn the world upside down not only from a climate perspective, but also from a political and societal perspective. And again, history tells that if it comes to that, it will not be peaceful.

Rating: ⚡⚡

🎙️ Full Episode: Apple | Spotify
🕰️ 29 min | 🗓️ 09/01/2021
✅ Time saved: 27 min