GC’s Enoizi: Meeting climate adaptation challenge is “generational opportunity” for insurers

Guy Carpenter’s Julian Enoizi has issued a renewed call for greater collaboration across the industry to meet the climate adaptation challenge, highlighting that the sector has a “generational opportunity to make a difference to the global economy”.

Enoizi, the former Pool Re CEO who joined Guy Carpenter last year as head of its global public sector practice, told an Insurance Institute of London webinar of the need to change the narrative of the insurance industry and increasingly shift the focus towards adaptation measures that can build pre-event resilience.

Enoizi was a key figure in the launch of a new partnership mobilising support for insurance-based climate adaptation projects as part of the UN’s Race to Resilience global campaign, launched at the COP27 talks in Sharm El-Sheikh, Egypt, last November.

“The Race to Resilience campaign is essentially a similar campaign to the Race to Net Zero,” he said. “The goal is to increase the resilience of four billion people already living in vulnerable conditions.

“COP27 was about calling on the industry to think about radical ways to collaborate to redefine the role it can play.”

By creating a broader dialogue, Enoizi said it was possible for the industry to multiply the impact of its actions.

“The idea is to build on this before COP28, when the insurance industry will come together with a bigger push on delivering on climate adaptation.”

Enoizi highlighted how every dollar invested pre-event delivered at least $5 in benefits, but still close to 90 percent of disaster risk management funds are allocated to response and recovery.

Changing behaviour of individuals through incentivisation is one tool that could be used to make a difference, including through public engagement and risk information sharing as well as skills development in adaptation actions.

The initial report launched alongside the Race to Resilience campaign last November featured 17 examples of projects which seek to redefine the role of insurance in promoting climate risk reduction and adaptation.

These included initiatives such as an effort to embed parametrics into anticipatory finance, as well as the concept of community-based cat insurance.

“Rather than sell insurance to low-income residents, we sold an insurance product to the municipality so it covered all the citizens. The community can then recoup that premium through their equivalent of council tax.

“The savings made through the community purchase can then be used to build resilience – for example by building flood defences.”

Enoizi said it was critical that the industry stepped up its efforts to address the protection gap.

“Insurance isn’t keeping pace with global GDP. If you look at the decade preceding the financial crisis, the insurance sector grew more or less in line with GDP. But since the financial crisis global GDP has outpaced insurance by quite a large margin.

“As an industry we have to find a way to play our part. If we don't, our clients who are grappling with these issues will increasingly see us as irrelevant.”