Supporting greener energy
The insurance industry is working to generate innovative and sustainable solutions to emerging climate risks
Through its ability to provide insurance solutions that support a range of sectors with their decarbonisation activities and redirect significant capital flows towards climate-positive solutions, the insurance industry occupies a unique position within the global economy to help address the climate crisis. Despite significant steps taken to date, the industry recognises there is much more to be done if we are to avoid the destabilising and potentially catastrophic effects of climate change.
Munich Re has helped pioneer the insurance industry’s approach to embedding environmental, social and governance considerations into business decisions. They remain committed to ensuring their business stands ready to support customers in the transition to a low-carbon economy. Given the scale of Munich Re relative to peers it often assumes a role as insurer or reinsurer of more complex risks, and therefore has an exciting opportunity to be at the forefront of product innovation.
The demand for sustainable insurance solutions is only going to further increase in the coming years, and Munich Re is determined to be at the cutting-edge of this momentum shift.
Munich Re is taking concrete steps to provide more sustainable products and services
Munich Re is an industry leader in providing bespoke insurance cover which the traditional insurance market is either unable or hesitant to provide. This means it is always striving to be at the forefront of risk knowledge and innovation. A recent example is their parametric insurance product which offers protection for hail damage to onshore solar farms – an emerging risk that in 2019 resulted in a c.$80m damage claim in Texas.
Munich Re also helped pioneer insurance cover for the offshore wind sector, which is another vital green technology facilitating the global transition to a low-carbon economy. The challenge with insuring offshore wind is that projects are very complex, large, and costly, with issues proving difficult to resolve given their exposed and often remote nature. To address this, Munich Re have leveraged their expertise and understanding of the wind energy industry to provide the necessary level of insurance protection required and remove a potential obstacle to further investment in this sector. Munich Re provides wind project insurance which is designed to cover the entire project lifecycle from construction through to operation.
Such products are aimed at addressing the emerging risks arising from a change in the global energy mix, enabling developers and operators to demonstrate to investors that risks are appropriately measured, monitored and managed.
The Lloyd’s link
Lloyd’s and Munich Re have a long-standing partnership and provide a platform for product innovation
As a key syndicate operating within the Lloyd’s market, Munich Re plays a vital role in providing cutting-edge coverage for new energy sources and emerging risks.
One of Munich Re’s latest and most innovative contributions to the Lloyd’s market is the launch of their Munich Re Innovation Syndicate 1840, representing the first example of a Lloyd’s syndicate-in-a-box, an initiative of the ‘Future at Lloyd’s’ which is designed to attract new sources of capital into the market.
Syndicate 1840 aims to identify insurance coverage gaps and provide appropriate specialised cover not currently met by the traditional market. Syndicate 1840’s three main areas of business are: weather parametric products, green energy solutions, and broader emerging risks – including hobby drones, InsurTech, autonomous vehicles and social mobility solutions such as city scooter hires.
Syndicate 1840 aims to identify insurance coverage gaps and provide appropriate specialised cover not met by the traditional market.
Munich Re will continue to lead the insurance market in providing innovative solutions to emerging risks
Emerging green technologies are the future; but as well as providing vast opportunities for businesses and society alike, they also generate their own challenges. One of those challenges is how the insurance industry can provide sustainable insurance coverage to stimulate the investment needed in each vital technology. The constantly evolving nature of green energy requires the insurance industry to be on top of the latest in risk expertise and product innovation.
As a leading player in the Lloyd’s market, a product leader in emerging green technology cover and a pioneer of the Lloyd’s syndicate-in-a-box initiative, Munich Re strives to remain at the forefront of innovation.
To learn more about Munich Re’s wider sustainability ambitions, visit the website below: