Fullfilling a Legacy of Societal Risk Management
Mobilizing Insurance Sector Capabilities to Advance Community-Level Climate Risk Reduction and Adaptation
Marsh McLennan has collaborated on a new report: Fulfilling a Legacy of Societal Risk Management: Mobilizing Insurance Sector Capabilities to Advance Community-Level Climate Risk Reduction and Adaptation.
Marsh McLennan is proud to sponsor the COP27 Resilience Hub and have partnered with the UN Race to Resilience Initiative, UN Climate Change High-Level Champions, and the Adrienne Arsht-Rockefeller Foundation Resilience Center to launch the report, which seeks to align insurer sector capabilities with community-level climate risk reduction needs. It is the hope of the initiative that by shining a light on new thinking the insurance sector can build on its proud legacy of helping society cope with new risks and play a leading role in preparing the world for climate change.
The framework outlined in the report applies 5 core insurance sector capabilities–risk finance, risk analytics, impact investing, strategic philanthropy and stakeholder engagement–to a series of 17 innovative Pioneer Projects that illustrate the power of insurance to de-risk, finance and advance pre-event risk reduction efforts.
These projects, ranging from parametric-based capital stacks and blended forms of infrastructure finance to large-scale microinsurance schemes and nature-based protection programs, are redefining the role of insurance in shifting global disaster planning from a recovery to a resilience mindset.
The report highlights Guy Carpenter’s pilot project in New York City aimed at using parametric triggers to provide flood coverage to lower income residents.
Under the model, homeowners benefit from a community-based catastrophe insurance (CBCI) program for all or a portion of a stated climate peril (flood or earthquake, for example) by a group insurance policy, typically purchased by a local government agency or community organization. The community-based underwriting approach reduces administrative, risk financing and distribution costs, opening up both risk reduction and risk transfer options.
Guy Carpenter is uniquely positioned to help its clients understand which perils and regions are most at risk due to climate change. Working in tandem across the Marsh McLennan enterprise with Marsh, Oliver Wyman and Mercer, Guy Carpenter provides services to its clients that span multiple climate-related areas, including transition risk modeling, climate investment portfolio modeling, asset-level resilience surveys and scoring, and commercial due diligence.
Additional materials can be found on Guy Carpenter’s Climate Change page and Marsh McLennan’s Climate Hub.
