Amid the sweltering, record-breaking temperatures of a Europe-wide heatwave, thousands of delegates gathered in June for London Climate Action Week (LCAW).
The eighth edition of LCAW saw more than a thousand events take place across the city, as climate experts, academics, business leaders, NGOs, community groups and many more met to discuss ways to respond to climate-related risks.
We took part in several panel discussions, highlighting the role that risk expertise and insurance can play in the future energy mix, by exploring practical ways to help address complex global risks.
Collaborating to tackle complex risks
It’s important we find ways for the insurance market to take a layer of clearly defined risk that will give comfort to investors in projects seeking to address ecological issues. To do that we must work with others to find impact-driven, science-based insurance solutions, aligned with access to capacity to underwrite them.
As recent events like supply-chain disruptions have illustrated, environmental risks are increasingly interconnected and potentially systemic. That complexity and magnitude mean that these risks cannot be addressed by one sector, one company or one product alone. The creation of solutions requires collaboration and innovation, using data, science and product understanding.
One of the LCAW sessions discussed the Lloyd’s of London consortium that we launched earlier this year in conjunction with SCOR. It’s designed to address a gap in the market for insurance solutions to cover the risks associated with projects that assist the recovery of degraded, damaged or destroyed ecosystems.
Restoring nature is vital
About half of the world’s GDP is reliant on nature in some way or another. Finding practical solutions to address the systemic risks of nature degradation and ways to encourage and enable investment in ecological restoration are important goals for our market.
A recent report from the United Nations Environment Programme (UNEP), State of Finance for Nature 2026: Nature in Red, Powering the Trillion Dollar Nature Transition, stated that investment in nature-based solutions must increase by 2.5 times by 2030 if global biodiversity, climate and land restoration targets are to be met.
The consortium with SCOR is aimed at helping to boost investment in ecological restoration projects. It provides capacity to a solution that indemnifies costs like replanting trees or rebuilding wetlands if they are damaged by events such as fire or storm.
The risk of this type of event happening cannot be eliminated, but panellists agreed a solution that offers coverage should they occur gives investors greater confidence and enables more ecological projects to go ahead.
The transition to a future energy mix is like a 1,000-piece jigsaw puzzle.
Understanding and navigating the social implications of the transition
As well as finding ways to enable investment in ecological solutions, a key element of our work on climate-related risk is looking at other ways to incentivise decarbonisation in emerging economies.
During LCAW, we also took part in a panel to discuss ongoing research by Oxford Net Zero, a multidisciplinary programme at the University of Oxford, entitled Delivering Fair and Just net-Zero Transitions in Emerging Markets and Developing Economies (EMDEs).
We sponsored the research study which is looking at the ways in which the private sector is contributing to decarbonisation in India, Kenya and Mexico and on ways these economies can meet decarbonisation targets without compromising growth opportunities.
Insurers and other multinational organisations have a clear role to play in ensuring the transition to a future energy mix is not a two-speed process.
We can be part of the solution; we need to think about how we incentivise decarbonisation. Collaboration and communication will be key too. We need to have conversations with companies and communities in emerging economies, to understand their needs and ambitions and how we can bring innovative solutions to ensure the transition to a decarbonised economy is fair.
Finding the value
The transition to a future energy mix is like a 1,000-piece jigsaw puzzle. There are numerous challenges for which we – in collaboration with clients, peers, regulators and society – are looking for solutions.
But in every decarbonisation measure or environmental restoration project there is a core of economic and financial value to be unlocked. We need to work to understand, case by case, where that value is, and what are the risks we are looking to find responses to – as well as what risks we might create if we get this wrong.
When we think about the challenges that might at first make something seem impossible, we must think creatively about the solutions we can build or adapt to meet them. This will take vision. But the lively and constructive discussions that I joined during LCAW have sparked yet more ideas and given us new inspiration about the role that insurers are playing and will continue to play in contributing to a fair transition and tackling ecological risks.
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US- and Canada-Issued Insurance Policies
In the US, the AXA XL insurance companies are: Catlin Insurance Company, Inc., Greenwich Insurance Company, Indian Harbor Insurance Company, XL Insurance America, Inc., XL Specialty Insurance Company and T.H.E. Insurance Company. In Canada, coverages are underwritten by XL Specialty Insurance Company - Canadian Branch and AXA Insurance Company - Canadian branch. Coverages may also be underwritten by Lloyd’s Syndicate #2003. Coverages underwritten by Lloyd’s Syndicate #2003 are placed on behalf of the member of Syndicate #2003 by Catlin Canada Inc. Lloyd’s ratings are independent of AXA XL.
US domiciled insurance policies can be written by the following AXA XL surplus lines insurers: XL Catlin Insurance Company UK Limited, Syndicates managed by Catlin Underwriting Agencies Limited and Indian Harbor Insurance Company. Enquires from US residents should be directed to a local insurance agent or broker permitted to write business in the relevant state.