Insurance ‘key’ to mobilising $10trn of climate transition investment

Written by Michael Griffiths

24/06/2024

Over $10trn in investment already committed to financing the climate transition will require additional insurance coverage, new jointly published research by Howden and Boston Consulting Group (BCG) has suggested.

The figure equates to more than half of the $19trn already committed to financing the transition through to 2030.

Howden said that the acceleration in demand means corporates should engage the insurance industry from an “early stage in their climate risk management planning”, to secure adequate supply of capacity and long-term coverage.

The firm also suggested this could be a “game changer” in unlocking climate finance at the speed and scale required.

“Insurance is the financial bedrock needed to de-risk investments and attract the additional capital necessary to mobilise the climate transition,” CEO, climate risk and resilience at Howden, Rowan Douglas, said.

“Astute companies are now elevating future insurability to boardroom level discussions because it will be essential to maintain access to capital. The key is developing long-term partnerships with insurers to build shared expertise and trust and optimise future access to scarce underwriting capacity. The alternative is an invitation to climate valuation risk.”

Managing director and partner at BCG, Lorenzo Fantini, added: “Achieving net-zero and climate resilience with adaptation strategies is an unprecedented challenge for all economies. Without sufficient insurance to de-risk markets, a smooth transition will be impossible.

“The insurance market must lead the de-risking dialogue to ensure the insurability and bankability of climate action.”

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