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 Climate change also significantly impacts the financial services sector. Increased extreme weather events, for example create an enormous risk for the insurance industry. The potential for a 'claims contagion', when systems cannot cope with the sheer volume of work and claims does exist. With record insurance payouts comes the potential for market downgrades and even lawsuits.
Opportunities:
Although some insurers have reacted strongly by withdrawing high risk products or increasing insurance rates, those with foresight have begun creating new products aimed at preventing losses through products that reward conduct that prevents loss. Examples of this include:
- Insurer-initiated hurricane loss prevention methods employed at nearly 500 locations by insurer FM Global, which avoided an estimated $500 million in property losses from Hurricane Katrina in 2005, after customer investments of only $2.5 million. According to FM Global, its customers sustained eight times less property damage than those choosing not to implement the hurricane loss prevention recommendations, and the $500 million savings helped make the company profitable in a year when few insurers were.
GCX Services: What we can do
Adaptation - Adaptation is the adjustment in systems in response to actual or expected climatic events or their effects, which moderates harm or exploits beneficial opportunities. GCX will look carefully at the impact that climate change will have on the market sectors that you insure. Examples of high risk industries include mining, transport, tourism, agriculture, oil and gas and residential properties. This will allow you to identify the physical, legal and reputation risks to these sectors and to structure insurance products tailored to high or low risk clients. By doing this you provide added value to your customers and can advise them on how best to reduce their own risk as well as yours due to the impact of climate change.
Efficiencies – GCX will assess your companies’ carbon emissions through a carbon footprint and a business case energy efficiency audit. The next step is to reduce your carbon emissions by working with you to set targets and budgets and then implement reductions and achieve cost cutting goals. Reductions include Education campaigns to ensure that your employees support internal initiatives. GCX will also monitor your emissions on an ongoing basis. As you embark on the journey to become a low carbon emission business you can gain significant marketing and PR traction and differentiate your brand as a climate change leader.
Increase Competitiveness – GCX will help you to open new markets by offering climate change risk products to differentiate your brand in ever increasingly competitive markets.
Increase Productivity – GCX offers you opportunity to create a Carbon Calculator for your website for your customers. This will help you to capture their carbon footprint and thus get a better understanding of their assets and how they use them. It will also allow you to have more control of the customer without such a heavy reliance on the broker for gathering accurate information.
Legislation and Reputation – GCX will determine the impact of legislation on your business and how best to respond to ensure that your profitability is not impacted. This includes determining the reputation risks exposed by being associated with high carbon emissions businesses. GCX will help you to identify high risk assets and sectors and green field opportunities. We will also help you to drive policy through access to our extensive industry based research. |
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