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The insurance industry needs an urgent paradigm shift: Climate Crisis

Feb 16, 2023

General Insurance Council of India Newsletter

February 15, 2023

Extracting the insurance industry out of its comfort zone – the business as usual (BAU) mode and its silos – but for much of Europe remains a major challenge. The inertia percolates from top down. The International Association of Insurance Supervisors (IAIS) has ‘outsourced’ the climate challenge to the UNEP FI. As the climate jargon swells on a daily basis; CO2 levels, pollution and biodiversity losses compound – the only assured outcome is tipping point of Planetary boundaries.

As global temperatures rise more and more of what can be insured becomes uninsurable. As risk carriers – insurers are also investors in physical assets (predominantly but not exclusively fossil fuels) face transition risk thereby likely to become stranded assets. Dreaming of profitable growth and delighting the customer with this backdrop will be a mirage.

I am thankful to the General Insurance Council of India for having invited me to pen a ‘short piece’ on the subject for its maiden newsletter. Sincerely hoping that the messaging howsoever simplistic – will not fall on deaf ears. That India’s economy must pursue a decarbonised trajectory is a foregone conclusion. The urgency is compelling if we must attain resilience to face existential climate threats – unleashed by our actions.

Here is a stark reminder from my friend – renowned conservationist Bittu Sahgal: “My generation has left you a world with fewer choices and greater risks. But it’s still a beautiful planet…”.

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