Results from a new study by AXA, one of the global one of the world leading insurance and asset management groups serving over 100 million clients, indicated that 60% of risk managers fear that certain geographies or activities will become uninsurable in future due to the impact of climate change.
AXA, in its latest its 2021 AMRAE Climate Commitment Barometer, reported the growing importance of taking into account and understanding climate risks and that majority of risk managers were aware of the threats posed by climate change to their companies and their value chains.
A news report on the research findings by Reinsurance News, an online medium, indicated, for instance, that more than 80% fear the impact of floods or temperature increased, while more than half of the respondents considered they had poor visibility on the climate risks affecting their value chain.
But despite this, AXA found that companies’ level of integration of climate risk is uneven, as more than 40% of risk managers surveyed report that their organization does not yet have a climate risk governance mechanism in place.
According to the AMRAE Climate Commitment Barometer by the French multinational insurance company, although nearly 75% of the risk managers interviewed stated that they were committed or very committed to climate risk issues, AXA noted that they played a variable role in managing these risks.
The report findings further reflected that in 60% of cases, the CSR team was responsible for managing climate risks, while the risk team is responsible in 30% of cases only, and in 12% of the cases, management is shared between the two teams.
AXA reported that only 20% of the risk managers surveyed were found to be directly responsible for analyzing and mapping climate risks, while 46% contribute to this process.
Additionally, AXA’s study showed that 70% of risk managers were not satisfied with the insurance market’s response to growing climate risks, and would like insurers to better react by modeling climate perils in a more precise and transparent manner, and by better considering adaptation measures in place in their risk calculations.
Even then, more than 60% of respondents feel that they need additional skills to grow in this field and 40% wish to receive more training on how to take climate risks into account.
The reinsurance firm clarified: “It is not too early to say that the year 2021 will be a landmark year for Risk Managers in many French companies.
“The severe and tragic climatic events of this summer (floods in Belgium and Germany, forest fires in Greece, hurricane Ida in the United States, etc.) are already having an impact – or will have an impact – on renewals, highlighting the need to adapt the risk and insurance businesses to the growing climate risks.
“These events undeniably accentuate what we have known for many years, but which we had not necessarily all integrated: climate change and its consequences are already here. We must not only adapt to its inevitable effects, but also limit our impact to reduce the emissions that lead to accelerated climate change.
“The year 2021 was also the year of the COP26, an event expected to raise climate ambitions on a global scale. Its mixed results call on private sector players to play their part more than ever”, AXA added.