3 May 2022Insurance

Net zero ‘once-in-a-century opportunity’ for London insurance market: LIIBA

The potential value of opportunity provided by the global transition to net zero is large enough to double the size of the London insurance market, the  London and International Insurance Brokers’ Association’s (LIIBA’s) CEO Christopher Croft (pictured) has said.

According to an analysis by the broker trade body, the global insurance opportunity created by the transition is estimated to be in the region of $125 billion, and that achieving net zero will necessitate $5 trillion of global investment in green energy annually by 2030.

This compares with the London insurance market’s current estimated value of $110 billion from the 2020 London Matters report.  LIIBA established that the average ratio between insurance premium and total investment for relevant capital projects suggests an annual total of $125 billion of additional insurance-related spend by 2030 for the costs of transition alone.

The association believes that mitigating risk related to the net zero transition will entail investment in and adoption of new technology, management of stranded assets as well as insurance expenditure.

Speaking to the All Party Parliamentary Group on Insurance and Financial Services, Croft said: “For the first time,  LIIBA and its members have been able to quantify the level of insurance growth produced by the race to achieve Net Zero – and it’s a huge sum. If a significant proportion of that $125 billion came to London, it would transform our market and London’s standing for decades to come.  It will also help deliver growth in UK export earnings, UK GDP and employment.

“The positive news is that the London market is well-placed to be right at the fore of this transformative process. London’s brokers have a unique combination of skills and expertise that will enable their clients to make the changes necessary to achieve the net reduction in carbon emissions required.

“The key for London is to ensure we seize upon this once-in-a-century opportunity by brokers and risk carriers working together to give clients the guidance and the capital backing they need to embark on this transformational journey.”

Minister for Investment Gerry Grimstone, said: “As the largest global centre for speciality and commercial risk, the London market has continued to attract international investment for decades. So it’s great that London’s role in building climate resilience in the race to Net Zero could significantly see an increase in our market’s opportunities, and in turn boost jobs and benefit the UK economy.”

Craig Tracey MP, chair of the All Party Parliamentary Group on Insurance and Financial Services, commented: “This new  LIIBA analysis shows the huge potential opportunity Net Zero is creating for the British economy. As a world leader in risk transfer and risk mitigation, there is a unique space for UK use this expertise and be at the forefront of enabling the global drive towards low carbon and no-carbon technologies.”

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