The link to climate change and extreme weather was first made in the UK through a report following the storm surge of 1953. It was the worst natural disaster in British history in which 326 lives were lost. 59 of these were on Canvey Island, which also exposed London’s vulnerability to flooding. The report connected the disaster to a change in weather patterns, partly caused by rising seas, although it was beyond its remit to examine what was the fundamental cause. We now know that escalating CO2 levels are driving extreme weather events. While the capital’s flash floods in July did not have the devastating impact of those in Germany and Belgium, they nevertheless re-emphasised the capital’s exposure. Hackney, Hammersmith & Fulham, Islington, Brent, Tower Hamlets and Newham face a particularly high risk of flooding (as well as overheating). Nearly half of London’s hospitals, one in five schools and a quarter of the city’s rail stations are at risk of flooding.
The sector has taken and continues to take steps to address this specific issue. Flood Re was set up in 2016 by the insurance sector and the Government to underwrite the flood risk element of home insurance. Informed by Amanda Blanc’s (now CEO of Aviva) November 2020 report on the Doncaster Floods of 2019, it is likely to evolve further to make its cover more accessible to those still excluded from the market. Zurich set up the Z Zurich Foundation, which is part of the Flood Resilience Alliance to help vulnerable communities pro-actively reduce the effect of flooding.
Looking at other related areas, The insurance sector is also taking steps in the drive to reduce emissions from fossil fuels. “Insure our Future” is a global coalition of NGOs and social movements pressing insurance companies to stop insuring coal and fossil fuels. 23 insurers have now ended or limited their cover on coal projects, up from 17 the previous year. Nine insurers have also ended or limited cover for dirty tar sands, up from 4 last year. The action from insurers is having a tangible impact with coal developers facing insurance rate increases of up to 40% this year.
In this way the sector is a disabler of high emitting industries and becoming an enabler of green technologies. As large organisations, insurers can also have a positive impact throughout the supply chain. Aviva, for example, will require its suppliers to be net zero by 2030, creating a great incentive for change. And ClimateWise, of which DACB is the first member from the legal sector, is a good example of greater collaboration across insurers. The ClimateWise Principles requires members to, among others, advocate for progress on climate change, identify climate risks, incorporate climate-related issues into decisions and strategies and reduce the impact of their operations on the environment.
The extended Ultra Low Emissions Zone in London, effective from October 2021, is another step in accepting that high emitting transport cannot have penalty free access to our urban centres. The Dutch Supreme Court’s recent ruling against Shell that its transition plan was not robust enough is a clear message to businesses to put in place meaningful transition plans and that every organisation will need to play its part in order for the world to reach Net Zero by 2050. The insurance sector is aware that it is key to the success of this transition.