Across the Pond
Leader’s Edge caught up with Croft for an international perspective on the global climate crisis, the role of regulation, Llyod’s new underwriting framework, and a thing or two (or three) about what he thinks commercial insurance brokers should be thinking about.
We published a paper in the summer, “Our Role in Net Zero,” to highlight this. The unique role insurance brokers have in helping their clients manage risk means they will be pivotal to businesses achieving their net zero ambitions. We model climate risk and help clients analyze the threat it poses to their operations. Then we can help them mitigate those risks by building greater resilience into the way they do things. And only then do we help them find the right insurance product to cover any residual risk.
Some of those products will need the innovation that brokers specialize in. Net zero will only be achieved by adopting new, emerging technologies so we will need to find ways of insuring those—a challenge in a world where regulators more and more insist on mountains of historic data to underpin risk decisions.
And we will be at the forefront of measuring progress and incentivizing firms to make the right decisions. We believe that this is a particular area where LIIBA can help. A market approach to accrediting net zero plans and rewarding the achievement of milestones along that plan with better, cheaper insurance for the client is vital. We are working on how we can put that framework in place.
I think there is a wider mind set change that has to happen, but I think we are already seeing this in practice. Resilient, sustainable businesses are increasingly becoming synonymous with profitable ones. Environmentally effective no longer equates to additional cost. Extreme weather events are already demonstrating the need to cater for this risk to clients around the world. Insurance just needs to follow this trend and ensure the modern, green aware businesses of now and the future get the cover they need.
Back to where we started! Climate is a huge opportunity for our industry and we have a keen focus on ensuring our members take it. COP26 [The 2021 United Nations Climate Change Conference] in a few weeks’ time should be the launching pad for that.
Elsewhere, and maybe I shouldn’t be saying this in a U.S. publication, but we need to look to develop beyond our traditional markets and increase insurance penetration in countries that, thus far, have tended not to shop in London for cover. We need the brand recognition we enjoy in the U.S. to be replicated in Latin America, Africa and Asia Pacific.
I know I have had two but I would like to sneak in another—again something we have touched on, regulation. We are global businesses, big and small, trading across borders to achieve the right outcomes for clients all around the world. The regulatory framework does not begin to reflect that and those clients are disadvantaged by the extent of duplication in compliance our members—and our hugely valued partners amongst The Council membership—have to manage. We need to find a way to address that and deliver a better service for clients—the people that the regulatory system is supposed to be there to protect.