September 17, 2020 – The Ministry of Climate Change and Environment (MOCCAE), UAE Insurance Authority (IA), and the Global Green Growth Institute (GGGI) organized a virtual awareness workshop to discuss climate-related opportunities and challenges for the insurance sector.
Themed “Studying the Insurance Sector’s Opportunities and Risks in Light of Climate Change Challenges,” more than 50 insurance companies and other relevant stakeholders participated in the event for an in-depth discussion about the potential role of the insurance sector in minimizing the risks and maximizing the benefits amid the climate crisis. The workshop is one of the key milestones of the Climate Change Adaptation Project focused on the insurance sector.
MOCCAE provided a brief introduction about the project to inform the stakeholders about the goals, activities, outputs, and outcomes of the partnership. GGGI delved into tackling the insurance sector through the lens of climate change, highlighting the important role of insurance in helping meet the Sustainable Development Goals (SDGs) specifically SDG 2: Zero Hunger, SDG 3: Good Health and Well-being, SDG 8: Decent Work and Economic Growth, and SDG 13: Climate Action.
- Environmental risk is one of the most defining threats of our time, both in terms of likelihood and impact. Natural catastrophes have been increasing in the past four decades and more than 70% of the losses are unfortunately not insured.
- The roles of the insurance sector in helping achieve the Sustainable Development Goals (SDGs) include: being a “shock absorber” of the impacts of natural disasters, thereby enabling financial resilience; promoting health and social protection; and enabling decent work and financial inclusion. Among these roles, the climate-related contribution is the least appreciated.
- There has been mounting public support for a low-carbon, climate-resilient recovery from the COVID-19 economic crisis. This presents an opportunity for the insurance sector to play a bigger role in minimizing the risks and maximizing the opportunities from climate change.
- Opportunities: resource efficiency, renewable energy sources, environmental goods and services, market for green technology, and resilience.
- Climate-related risks: physical risks (due to chronic and acute changes to the environment, exacerbated by the ongoing COVID-19 pandemic); transition risks (related to the transition to more carbon-neutral economic activities); and liability risks (determination of legal responsibilities for the outcomes of actions taken and not taken in the management of climate risks).
- A survey result revealed that 43% of the UAE’s insurance companies are already preparing for climate risks. Opportunities include: raising the profile of climate risks in the organization; improving assessment of climate risk using advanced analytics; adopting an enterprise-wide view while managing climate risks; and working with policymakers, policyholders, and administrative agencies to address climate risks.
- To facilitate an appropriate level of awareness and action at the individual insurer level, the UAE government is committing resources to conduct a climate risk assessment and adaptation action plan for the insurance sector in the UAE in collaboration with GGGI.
Please click here for the press release from the MOCCAE. For more information about GGGI’s support for the UAE Adaptation Program, please contact Chiden Balmes, Senior Officer (email@example.com).