Insurance sector cannot “back away” from responsibilities, she warns
At the International Congress of Actuaries in Sydney, former Lloyd’s of London CEO, Dame Inga Beale (pictured above), called on the insurance industry to take steps to rectify the exit of big insurers from the Net Zero Alliance. No longer representing a particular company, Beale said she was “speaking from the heart.”
“The insurance sector cannot back away from their responsibility to try and meet those Paris Agreement climate targets,” she said in her keynote address. “We have to keep driving that.”
Beale said the exodus of nine global insurers from the Net Zero Alliance is indicative of the divide “in this fragmented world.” She said it was “really worrying” that “rhetoric” in the United States could cause insurers to pull out of an alliance for fear of potential lawsuits and antitrust actions by regulators.
Beale calls for action on climate change
“As an insurance industry, in our way, however, we can get away with it, we’ve got to do something about it,” said Beale. “De-decarbonisation is essential.”
She mentioned the very significant insurance impacts of climate change fuelled natural disasters, including when she was running Lloyd’s.
“We know from all the analysis that the actuaries did that if we go back to Superstorm Sandy [in 2012] $8 billion out of the $70 billion costs of that disaster came from purely the rise in in the level of the sea over the last few decades,” said the former Lloyd’s chief. “That’s climate change, it’s a real economic impact.”
Beale said the current geopolitical situation, including the war in Ukraine, United States/China tensions and rising nationalism, is very concerning. She said she was surprised by this fraught state of world affairs and contrasted it against globalisation’s success lifting many millions of people out of poverty.
“People were benefiting from it but then, a few years ago, it all started to crumble,” said Beale. “Never, ever did I imagine that there would be a war in Europe in my lifetime after decades of peace,” she said.
US and China tensions
Beale was particularly worried by the technological and economic battle between the United States and China.
“Those two countries control 40% of the world’s GDP,” she said. “We cannot ignore the fact that they’re not getting on right now.”
Beale said this “distraction” allowed Russian leader Putin to start implementing his “mastermind plan.”
3Ds: De-carbonisation, digitisation and diversity
However, she said the global situation “does worry me but I can’t necessarily do anything about that.” Instead, Beale said her personal answer is to focus on things she can do something about.
In the insurance world, she said her focus in on “the three Ds”: De-carbonisation, digitisation and diversity.
Beale spent more than four decades in the insurance industry. In 2013 she became the first female CEO in Lloyd’s three-hundred-year history. She stepped down in 2018 after transforming the iconic firm’s workplace, both the diversity of its employees and use of digital technology.
Flannery calls for 75% emissions cut by 2030
Professor Tim Flannery, one of Australia’s leading climate advocates and authors, followed Beale with a climate change presentation.
He called on Australia to set a new emissions target of 75% reduction by 2030. Flannery said even the most optimistic scenarios expect a rise in global temperature of 1.8 to 1.9 degrees Celsius, which requires a halving of the world’s emissions.
Flannery set this “huge task” against the reality that, during the last 15 years, humanity has released about one third of all of the greenhouse gases we have ever emitted.
“The extremes that we do experience a decade from now will be way outside of anything that we will have seen to this point,” he said. “Even if we cut emissions as hard and fast as we possibly can.”
For example, he expected the city of Shanghai to be 90% under water by 2100 unless major mitigation efforts take place.
Flannery said “very large-scale adaptations” are needed to shore up food security, water security, flood fire and health impacts. “The challenges are hard to comprehend,” he said.
In one graphic example, he said, the downpipes on every house in Sydney need widening to cope with the increased volumes of rainwater.
International Congress of Actuaries
For the first time in nearly 40 years, the International Congress of Actuaries is taking place in Australia. The Sydney event has brought together about 1500 actuaries and other stakeholders – including from the insurance industry – and continues until Thursday.
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