July 20, 2024

Political Commentary

News Politics Business Sports

At least $10tn of insurance cover needed to reach net zero, report says

2 min read

Unlock the Editor’s Digest for free

Insurance cover will be crucial for more than half of the $19tn of investment already committed to financing the transition to net zero, putting “unprecedented structural pressures” on the sector, according to a new report.

Insurance broker Howden and Boston Consulting Group have concluded that at least $10tn of new cover will be required for the energy, road transport and building sectors between 2023 and 2030, including for huge infrastructure projects such as offshore wind, solar farms, as well as the insulation of existing housing stock.

Rowan Douglas, chief executive of Howden’s climate team, said the report was meant as a “wake-up call” on the vital role of insurance coverage in the energy transition and the challenges this presented. The stresses on the market would be “ubiquitous”, he added.

“We are going to be having this energy transition globally, at pace and scale, all at the same time.”

Executives and policymakers have increasingly focused on the enabling role of insurance in building the infrastructure and technology required for the energy transition, and questioned whether there is sufficient capacity in the industry to underwrite these sprawling and complex risks.

Insurers already provide extra cover in a range of areas from hydrogen-powered and electric vehicles to offshore wind and hybrid building materials, and plan to expand into newer technologies. But there is also a pressure on insurance firms to be cautious about how much new risk they take in areas where there is a lack of historical data on losses.

“The new energy technologies are pressing the envelope in terms of innovation, and therefore riskiness, and [so] are harder to underwrite,” Rowan said. “If there is going to be a shortage of capacity, it is likely that capacity will flow to areas that are more understood and more profitable.”

2024-06-23 19:01:41

All news and articles are copyrighted to the respective authors and/or News Broadcasters. VIXC.Com is an independent Online News Aggregator

Read more from original source here…

Leave a Reply

Copyright © All rights reserved. | Newsphere by AF themes.