Governments must pool resources and listen to insurers

Governments must work together to mitigate the increasingly complex array of interconnected risks and challenges facing their economies and populations.

But the insurance industry can also help manage these risks by investing expertise and resources in a manner that is targeted and considered.

That was one of the conclusions of a global risks report released by the World Economic Forum and debated by its authors and insurance industry executives at its launch in London this week.

The report considered the effects of the globalisation of businesses and the twin but connected threats of ongoing economic malaise and severe, costly weather events.

Dealing with these challenges could be done in a joined up way, said the report, instead of economic growth taking precedent over the need to tackle the causes and consequences of climate change.

Axel Lehmann, chief risk officer at Zurich Insurance Group, who sat on the panel, said the cost of dealing with increasingly severe weather events had grown exponentially and it is time for governments to act together. “The writing is on the wall,” he said.

The insurance industry and wider financial services sector has much to offer on both fronts, said David Cole, group chief risk officer at Swiss Re.

For instance, the industry could make investments in infrastructure projects that would enhance countries’ resilience to the risks that they face. Such a move would allow countries to better mitigate against certain types of natural catastrophes while also boosting employment and creating additional tax revenues.

“Insurance and reinsurance companies are particularly suited to providing such long-term investments that both put people back to work and which can address climate issues at the same time,” said Cole speaking to Intelligent Insurer at the launch of the report in London on Tuesday.