Airtime at AIRMIC for Sustainable Insurance

17-18 June 2008 | Edinburgh, Scotland

Sustainable insurance was a major attraction at the 2008 Conference of the Association for Insurance and Risk Managers (AIRMIC), “Communicating Risk Management.” AIRMIC has nearly 1,000 members and represents the insurance buyers and risk managers of about 75% of the UK FTSE 100 group of companies, as well as very substantial representation in the FTSE 250 and other smaller companies. AIRMIC members control about £5 billion of annual insurance premium spend, an estimated £500 million on brokers and other service providers and a further £2 billion of premium paid to captive insurance companies. Butch Bacani of UNEP FI and Sunny Sehgal of HSBC Insurance Brokers, a member of the UNEP FI Insurance Working Group (IWG), teamed up for the session, “The Next 200 Years: Managing Climate Change and Sustainability Risks”, which also commemorated the 200th year anniversary of HSBC. The tandem touched on the global sustainability issues featured in the IWG’s inaugural report, “Insuring for Sustainability”, focusing on climate change and environmental liability. Butch covered the overarching IWG goal to develop “Principles for Sustainable Insurance”, and climate change initiatives by insurers in the areas of products, investments and research. He emphasised the main challenges and risks for renewable energy projects, and the vast potential for standard and exotic insurance and other financial risk management instruments – political risks insurance, turbine warranty insurance, certified emissions reduction futures, weather derivatives, and carbon credit delivery guarantee – highlighting their benefits on default rate, debt credit rating, cash flow, internal rate of return through case studies of wind farm and biomass projects in China, Egypt and India. Sunny addressed sources of environmental liability, the benefits of environmental insurance over general liability insurance, and the need to shift to a proactive approach. He also explained the adaptation and mitigation dimensions of climate change in the context of industry sectors – tourism, insurance, energy, construction, and agriculture. An interactive Q&A session ensued, covering a host of topics – nanotechonology; renewable energy technology transfer; climate change, microinsurance, developing countries, and the roles of the UN and the private sector; and the principle of common but differentiated responsibilities. The session received considerable media coverage from entities such as Insurance Day, BestWeek (A.M. Best Europe) and Post Magazine. For more information on AIRMIC and the UNEP FI Insurance Working Group, please visit: http://kunsthaus-schwanheide.info/work_streams/insurance/index.html