The Geneva Association released the report on climate tech and insurance, titled Bringing Climate Tech to Market: The powerful role of insurance.
The research recognises the need for innovative approaches to assessing technology market readiness and financing, underscoring the important role of insurers.
A Geneva Association survey of insurance C-level executives finds that the early engagement of re/insurers in climate tech projects is critical to improving project risk assessment and securing financing (see about Impact of Climate Change on Insurance Industries).
As the world races to meet global climate targets, industries worldwide are under increasing pressure to adopt new technologies and processes to expedite their decarbonisation efforts.
Industries across a variety of sectors are embracing artificial intelligence (AI) for improved services, efficiency and costs.
In insurance, AI is reshaping business processes, from underwriting to claims management and customer engagement.
AI also has the potential to enhance the value of insurance to society by enabling protection and mitigation services.
Despite the benefits AI offers to both customers and insurers, however, there are concerns around privacy and the risk of potential discrimination, as well as the lag between the pace of development of AI technologies and corresponding regulatory frameworks.
The recent emergence of more sophisticated generative AI tools has exacerbated these concerns and spurred a number of regulatory initiatives in several jurisdictions.
Taking stock of these developments, the report provides key considerations for regulators and policymakers that encourage innovation while ensuring adequate protection for customers.
In particular, it finds that existing, technology-neutral insurance regulatory frameworks can be leveraged to manage AI-related risks specific to insurance, whereas cross-sectoral regulation could hinder innovation.
Although innovative climate technology has advanced significantly, most projects remain at pre-commercialization stages due to funding gaps, scaling challenges, and a lack of risk data.
To cap global warming at 1.5°C, heavy industries like steel, aluminium and aviation, responsible for over 30% of global carbon emissions, need to deploy climate technologies on a wide scale.
The Geneva Association has introduced the Insurability Readiness Framework (IRF) to address these issues. This framework provides a structured method for assessing risks from an insurance standpoint.
Jad Ariss, Managing Director of The Geneva Association, emphasized that adopting climate technologies necessitates collaboration among industries, insurers, policymakers, and other stakeholders (see how NatCat Insured & Economic Losses Increases Due to Climate Change).
The adoption of climate technologies requires a collaborative effort from industries, insurers, policymakers and others
Jad Ariss, Managing Director of The Geneva Association
Insurers play a crucial role in securing financing and managing project risks.
By addressing funding gaps and utilizing insurance solutions, they can expedite the deployment of climate technologies and contribute to achieving global climate targets.
Maryam Golnaraghi, Director of Climate Change & Environment at The Geneva Association and the lead author of the report, stated that the IRF, developed in partnership with various sectors, categorizes risks into seven areas.
This helps stakeholders frame risks and engage in discussions with insurers. By identifying risks that are difficult to insure, the IRF highlights the need for alternative interventions, such as public-private partnerships, to bring projects to market.
