It’s time to ‘lean in’ to the green energy transition: Aon
“As an industry I think we challenge ourselves when it comes to achieving greater resilience to intensifying climate risk. We’ve been covering physical risk for a long time, now it’s about how we lean further into the transition to green energy.”
This was the view of Tracie Thompson, global head of ESG and Climate at Aon, speaking on a panel at the Intelligent Insurer Commercial Lines Innovation Europe 2023 conference in London.
The discussion was with fellow panellist Swenja Surminski, managing director climate and sustainability at Marsh McLennan, and moderator Saranyaa Mohan, founder and CEO of ARUVI Consulting.
Marsh McLennan’s Surminski said that there is awareness of the issue and the re/insurance industry has better tools and data. But she added: “The challenge is using that and making decisions that reflect on future risk.”
She said: “If you are an underwriter you’re looking at the next 12 months, but we know on the risk side there is a climate signal and it is increasing and there are tools and data to use. “I think there are gaps, and there is some way to go when it comes to complex risk. We talk about flooding one week, then drought the next, and nature playing a part. This is not straight forward.”
Surminski said that with physical risk, the question is how do you know an entity is becoming better adapted to climate risk. “Insurers can really catalyse changes in behaviour. Looking at the data and reflecting on this you can see where we could do more. This is a big opportunity and it is down to the industry to unpack some of these aspects.”
Aon’s Thompson commented that another area that needs more attention is where firms spend their capital, particularly where there is the risk of greenwashing and green hushing, the latter being when companies don’t publish their climate targets.
“If capex is going towards those commitments, how much is going to risk management? I think what will make the difference is changes around data. How do they deal with regulations and what’s the data that they need to measure these the right way? As an industry we’ve got to lean in and figure this out together. It is about adapting what we know around physical risk and what we do there.”
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