How did ClimateWise come about?
ClimateWise is the result of work initiated by HRH the Prince of Wales with the insurance industry. Insurers have worked on climate change issues for many years. ClimateWise takes that work to the next stage.
Following discussions with the Prince of Wales and his charities, a group of companies in the insurance industry came together under the leadership of Peter Hubbard of AXA UK. The work of the group was facilitated by the ABI (Association of British Insurers)
This working group drew up the ClimateWise principles. It then recruited other companies and organisations in the insurance industry who have signed up and endorsed them.
What is the point of ClimateWise?
As people who understand and manage risk, insurers play a major role in our economy and, increasingly, for the environment as well.
Insurers are major organisations and employers in our own right. So we have a duty to customers, shareholders and employees to uphold high environmental standards. As providers of insurance – property, health and savings – we also want to work with governments and our customers to promote climate-friendly behaviour and to help people adapt to the growing impact of the climate change that is already happening. And as institutional investors we have an interest in encouraging companies to manage effectively their risks around climate change.
How does ClimateWise make a difference?
Each of the signatories to ClimateWise has committed itself to observing the ClimateWise principles, and will report each year on how it has done so. ClimateWise will raise the profile of climate change issues still further in the industry, across general, life and health insurance, and in the fund management industry as well.
What are individual insurance companies and organisations committing themselves to?
The ClimateWise principles cover a wide range of commitments. These include the insurance industry’s role in identifying, analysing and managing risks, as partners in the development in public policy, in pursuing investment strategies and as provider of help on risk management to customers, both individual and commercial.
Each signatory to the ClimateWise principles will report each year on the actions they have taken to implement them. These reports will be independently audited.
What difference will ClimateWise make for customers?
Insurance companies are already responding to customers who need advice and help in order to manage the risks of climate change – particularly from increase flooding, wind storm and damage from erratic weather. For instance, insurers are increasingly advising on how to make properties more flood-resilient.
Latest research commissioned by ABI shows that half of homeowners want climate-friendly Household insurance and climate-proof Household insurance; 40% want climate-friendly motor insurance and just under a third want climate friendly travel insurance. But at the moment only one percent actually buy it.
Innovations in the market for motor insurance – such as using technology to enable pay as you drive and offering lower premiums to the owners of LPG and hybrid vehicles – and in property insurance are helping to encourage climate-friendly behaviour. Small business customers, and health insurance policyholders are also likely to see a growing emphasis on climate change issues from their insurance companies.
As major institutional investors, insurance companies are also leading the way in promoting good climate risk management by PLCs.
How many companies support ClimateWise?
Sixteen companies signed up to support ClimateWise in the first wave, including most of the largest household names in the UK. The initiative is also attracting support from global insurers, reinsurers, brokers and Lloyd’s syndicates. A total of 38 companies and organisations now support ClimateWise and we expect this number to grow over the next few months.
How will companies report and be accountable for their actions in support of ClimateWise?
The ClimateWise principles commit companies to incorporate climate risk into their business strategy and planning and to publish a statement as part of their annual reporting detailing the actions that have been taken in support of the ClimateWise principles. This will provide the public, commentators and the whole industry with huge amounts of information about the work of the insurance industry to reduce the risks of climate change and to support their customers.