The transition to a low carbon economy will require billions of dollars of investment every year across all parts of the economy. 尤物视频and reinsurance is vital to that effort and key to the ability of climate technology companies to develop the innovations needed to achieve net zero. Andy MacFarlane, Head of Climate, and Laura Watson, Energy Transition Leader, Risk Consulting, discuss how a proposed new insurability framework, which 九色视频helped to develop, will help climate tech providers view the development of solutions through a risk and insurance lens.
尤物视频and reinsurance have a crucial role in aiding the development and deployment of the technology that will accelerate and achieve the energy transition. An estimated $3.5 trillion of investment will be needed to achieve net-zero emissions by 2050, according to a McKinsey study. This spending will include both existing and prototypical technologies, for which there is little risk data.
Understanding these risks and finding ways to manage them will be key to achieving the transition, and this lies at the heart of AXA XL’s energy transition and climate strategies as we seek to find ways to help our clients on their transition journeys. And we are aware that cross-industry collaboration and thought-leadership will be vital to achieve this too.
In 2022, the Geneva Association, a global association of insurers and reinsurers of which AXA is a part, launched a multi-stakeholder, two-part research project, ‘Accelerating Climate Technologies for Industrial Decarbonisation and the 尤物视频Industry,’ to explore ways in which the (re) insurance industry can speed up the deployment of new climate technology in ‘hard to abate’ sectors.
Those sectors – namely aluminium, aviation, cement, chemicals, shipping, steel and trucking – collectively account for about 30% of global greenhouse gas emissions. And while enormous investment is going into finding technology that will minimise those emissions and enable those industry sectors to transition to a low carbon model, there is a recognition that the speed of development of that technology must be increased – and insurance has a vital role to play.
The first report produced from the research project, ‘Climate Tech for Industrial Decarbonisation: What role for Insurers?’, focused on that very topic. The research underlines the very real and important need to find ways to engage insurers early in the development of new technology to improve the insurability of that technology and boost investment in the solutions required to achieve the energy transition.
A survey of 88 C-suite executives from 26 property and casualty (re) insurance companies included in the report revealed that there is huge interest from clients, investors, governments and brokers in the risk engineering expertise and transfer solutions that underwriters like 九色视频can provide to increase investment in climate technology.
Some 95% of those executives said that insurance and reinsurance can play a strategic role in the development and deployment of that technology by engaging in projects at the pre-commercialisation stages.
This early engagement to better understand the risks and opportunities inherent in technology for which there will be little or no historical data, and which is often being developed by start-ups that may lack awareness of the services that insurance can offer them is clearly to the benefit of all involved in the process. But ensuring that early intervention will require an industry-wide effort.
An insurability framework for bringing climate tech to market
The development of insurance solutions applicable to this emerging area of technology risk and opportunity will clearly be vital to helping the technology be deployed more rapidly and more widely.
The second report from the Geneva Association’s recent research explored ways in which this can be achieved, and existing frameworks can be enhanced to give climate tech stakeholders better access to insurers’ expertise.
The report, ‘Bringing Climate Tech to Market; the powerful role of insurance,’ includes a proposed Insurability Readiness Framework (IRF) that enables risks to be viewed through an insurance lens and will make it easier for insurance to be brought in earlier in the development of the technology, ultimately speeding up its commercialisation.
Existing frameworks, like the widely used Technology Readiness Level (TRL) model, assess a technology’s readiness for operational deployment but without considering certain insurance-critical factors like supply-chain issues and the regulatory environments.
In 2023, the US Department of Energy released an Adoption Readiness Level (ARL) framework, developed to implement the TRL, which includes 17 risk types including licence-to-operate factors, environmental and safety issues and resource management.
The Geneva Association built upon this concept to develop an Insurability Readiness Framework (IRF) that takes the risks included in the ARL model and applies an insurance lens.
The IRF explores seven categories of risk: technology risk; project information and organisation risk; legal, financial and compliance risk; location-specific physical climate risks; business interruption and supply-chain risk; long-term risk; and environmental, social and governance (ESG) risk.
The aim is to give technology companies a better idea of how insurable those risks are, and the information required to help manage those risks while highlighting the importance that appropriate insurance coverage will play in the successful commercialisation and speedy deployment of the technology.
We were delighted to take part in this important cross-industry collaboration. We hope that this research will have the desired effect of enabling earlier and more productive engagement between climate tech firms and insurance providers – working towards the aims of our energy transition strategy and our purpose to ensure human progress by protecting what matters.
The reports can be viewed
