There is no shortage of support for sustainability initiatives from insurers, reinsurers and brokers around the world – but the MENA region is perhaps not seen to be at the forefront of these initiatives.
In June of this year, for instance, Japan’s MS&AD adopted a policy that it would no longer insure or invest in new coal power plants - the first Japanese insurer to do so. Just days before, four Korean insurers made a similar announcement.
These actions reflect sentiments that are being echoed globally – by the likes of the Insure Our Future network - a global coalition of NGOs and social movements that is pressuring insurance companies to exit coal, oil and gas businesses and support the transition to clean energy.
Insure Our Future campaign global coordinator Peter Bosshard said, “All insurance companies need to follow the science, accept the conclusions of the International Energy Agency’s recent 1.5°C report and end all cover for new coal, oil and gas projects and related infrastructure. Aligning their business with a credible 1.5°C pathway is an imperative, not an option.”
Implementing such measures could have serious repercussions for the oil-dependent Middle East where underwriting energy projects has been a staple for decades.
Responsible asset management is also a requirement for modern insurance companies.
Investor Agenda (IA), launched in 2018, provides a common leadership agenda on the climate crisis for investors that is focused on accelerating investor action for a net-zero emissions economy. Founding partners include Asia Investor Group on Climate Change, CDP, Ceres, Investor Group on Climate Change, Institutional Investors Group on Climate Change, Principles for Responsible Investment and UNEP Finance Initiative.
The 2021 Global Investor Statement to Governments on the Climate Crisis prepared and released by the IA in June 2021 could be the strongest-ever investor call for governments to raise their climate ambition and implement meaningful policies or risk missing out on investment in tackling the climate crisis. The statement asks for climate-related financial reporting to be made mandatory – and that could come as a shock to some insurers, particularly in the Middle East.
Meanwhile, global risk and reinsurance specialists like Guy Carpenter have been busy acknowledging the imperatives of sustainability by launching initiatives including a suite of climate advisory and modelling services.
In addition to Nat CAT, these strategies are aimed at covering the transition risk of shifting to a lower-carbon future and the potential liability risks of not doing so.
As the immediate threat from COVID-19 fallout begins to fade, sustainability is becoming the central focus for many players. Physical exposure to climate risk, managing transition risk, addressing potential liability risk and underwriting for greener outcomes should remain central to all insurers in the Middle East for the foreseeable future.
In the following pages we hope to give readers a fascinating glimpse of which economies and which insurers in the region are leading the charge to a sustainable insurance future.
Paul McNamara
Editorial director
Middle East Insurance Review