8 (re)insurers vow to align underwriting with net-zero greenhouse gas emissions by 2050

Three of the world's biggest reinsurers - Munich Re, Swiss Re and SCOR - have joined hands with five insurers to launch the pioneering Net-Zero Insurance Alliance (NZIA), convened under the UNEP Finance Initiative's Principles for Sustainable Insurance (PSI).

The other founding members of the NZIA are AXA, Allianz, Aviva, Generali, and Zurich Insurance Group. They are building on their climate leadership as investors through their membership in the UN-convened Net-Zero Asset Owner Alliance (NZAOA) established in 2019, where all eight NZIA founding members are already individually setting science-based 2025 decarbonisation targets for their respective investment portfolios in line with a net-zero transition pathway.

Equally, based on the NZIA Statement of Commitment launched on 11 July, these global insurers and reinsurers will individually set science-based intermediate targets every five years and independently report on their progress publicly and annually. They will also advocate for and engage in governmental policies for a science-based and socially just transition of economic sectors to net zero.

Underwriting

They have committed to transition their insurance and reinsurance underwriting portfolios to net-zero greenhouse gas (GHG) emissions by 2050, consistent with a maximum temperature rise of 1.5°C above pre-industrial levels by 2100. Each company decides how it will achieve this objective.

Mr Thomas Buberl, CEO of the AXA Group, which chairs the NZIA, said, “With this new Net-Zero Insurance Alliance, we are raising our climate ambition further by using our underwriting, claims, and risk management practices to help ensure and enable the transition to a resilient net-zero global economy.”

The concrete approaches that they can take to achieve their net-zero ambition on an individual basis include:

• setting underwriting criteria and guidelines for the most GHG-intensive activities within their underwriting portfolios,
• engaging with clients and potential clients with the most GHG-intensive activities on their decarbonisation strategies and net-zero transition pathways,
• developing and offering insurance and reinsurance solutions for low-emission and zero-emission technologies and nature-based solutions that absorb GHG emissions,
• improving claims management in an environmentally sustainable manner, and
• integrating net-zero and decarbonisation-related risk criteria into their risk management frameworks.
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The NZIA Statement of Commitment is a comprehensive framework and considers the latest available scientific knowledge and associated social impacts, as well as findings of recognised reports such as those by the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency’s (IEA) Net Zero by 2050 report. It includes supporting the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), considering emerging frameworks such as the Task Force on Nature-related Financial Disclosures (TNFD), supporting the UN Sustainable Development Goals (SDGs) and the Post-2020 Global Biodiversity Framework, and signing the UN Principles for Sustainable Insurance (PSI).

The Statement also recommends that insurers transition their investment portfolios to net-zero GHG emissions.

The NZIA membership is expected to grow to include insurers, reinsurers, brokers and insurance market bodies from across the globe.

Source: Asia Insurance Review