Page 110 - India Insurance Report 2023- BIMTECH

98 India Insurance Report - Series II

advocate for policies and regulations that address climate change risks. They can engage in thought
leadership by conducting research, publishing reports, and participating in industry forums to raise
awareness about the importance of climate risk mitigation and adaptation. (Re)Insurers can also collaborate
with governments, non-governmental organizations, and other stakeholders to develop innovative
solutions to climate change challenges, such as parametric insurance, risk-sharing mechanisms, and climate
risk bonds. To contribute to the low carbon transition of the economy, (re)insurers are also participating
in various alliances with a core objective to encourage science-based methodologies and to demonstrate
their commitment to discourage carbon-intensive investments in supporting the transition to a greener
economy. Carbon Purchase Protection insurance, which protects buyers of forward purchased carbon
removal credits against carbon delivery risk, is one such move by (re)insurers to help corporates transfer
this risk off their balance sheet and support them in the net zero strategies.

(Ré)Insurers are at the forefront of innovation when it comes to addressing climate change risks.
They actively invest in research and development to develop cutting-edge technologies and solutions
that can enhance risk assessment, modelling, and management. For example, (re)insurers are using satellite
imagery, remote sensing, and machine learning to assess climate risks with greater precision and accuracy.
Leading Reinsurers are supporting insurers and various corporate clients with physical climate risk
assessments. These assessments are based on the rich databases for natural disasters as well as hazard
modelling under different climate scenarios, which use the Representative Concentration Pathways
(RCP) for atmospheric greenhouse gas concentrations as per Intergovernmental Panel on Climate Change
(IPCC) recommendations.

Section 5 : Conclusion

The global (re)insurance industry is taking the lead in aligning its strategies and products with net-
zero commitments, TCFD frameworks, and the UN Sustainable Development Goals. Be it helping
industry players in capacity building for climate change and sustainability or creating an innovative
facility to deliver inclusive insurance solutions for most climate-vulnerable communities, (re)insurers
are the thought leaders in the space. While climate change is bringing a number of risks for (re)insurers,
it also presents opportunities for them to build resilience to the economy and therefore (re)insurers are
strategically very well placed in contributing to building resilience against the impacts of climate change
and support the transition to a low carbon economy. (Re)Insurers have also been coming up with
insurance products providing incentives to consumers to incorporate sustainability into their value chain.
Such sustainable insurance products support customers who are adopting green practices to become
energy and water-efficient, supporting the overall economic transition toward long-term decarbonization.