Interaction between insurance companies and the environmental policy sector has clear benefits to offer for both parties and helps to manage environmental risks, shows a new study conducted by Gaia.
According to the study, interaction between the insurance industry and environmental policy actors has an important role to play in decision-making on the most effective ways to manage environmental risks, and in sharing data that both parties can benefit from. It can also help raise public awareness of environmental risks.
Risks caused by the environment and those caused to the environment by society present challenges to both the insurance sector as well as policy makers. Effective risk management requires coordinated measures, shows the study. To date, neither the insurance industry’s risk assessment and management expertise nor the use of insurance as a policy instrument has been widely used in environmental policy in the Nordic countries.
”Climate change poses a real threat: according to one of Europe’s largest insurance companies Allianz, climate changes causes up to a 37% yearly increase in claims arising from extreme weather events. At the same time, however, impacts of climate change offer a need and an opportunity to develop new and innovative insurance products. As this study shows, insurance could prove to be an effective and innovative tool for implementing environmental policy. Still, the ability of insurance to effectively protect policy holders and societies against risks is shorthanded without supporting environmental policy”, says Pasi Rinne, Chairman of Gaia.
To understand the dynamics between the insurance sector and environmental policy actors, three types of interaction were identified in this study: formal interaction, informal interaction, and information provision. The relationship between the actors can be strengthened by being able to define how interaction occurs. It is also important to understand the opportunities and challenges and to identify the right topics and timing for interaction. This will ultimately lead to more coordinated and efficient efforts to reduce risks.
The study was commissioned by Nordic Innovation at the request of the Nordic Council of Ministers to clarify the current and potential role of the insurance industry in Nordic countries’ environmental policy. Holistic management of climate change was chosen as the main theme under the Finnish Presidency of the Nordic Council of Ministers in 2011.
- Pasi Rinne, Chairman of the Board, Gaia Group, tel. +41-79-472 6909, email@example.com