A change in insurers’ risk acceptance factors should make brokers rethink their clients in high emissions sectors, says chief underwriting officer

Brokers can play a pivotal role in helping drive impactful change among clients’ efforts to achieve net zero emissions – but while the uptake is “quiet” for them, insurers can help too, said Allianz chief underwriting officer Catherine Dixon.

In April 2022, a report released by specialist insurer Ecclesiastical revealed that one in five brokers said their company had no interest in becoming net zero, while 40% felt their business needed more support to understand how it could reduce its climate impact.

Only 16% of surveyed brokers felt obligated to advise clients on how to reduce their climate risks.

Exactly 77% of brokers, however, said they believed reducing their company’s climate impact was the right thing to do for the environment.

Speaking at Insurance Times’ BrokerFest 2022 conference last week (16 June 2022), Dixon said that while spending a day with a group of brokers, she had discovered that there was “not a lot” of “proactive conversation” happening between them and their customers in terms of supporting them in the net zero transition.

She also revealed that the brokers said customers generally lacked interest in the Environmental, Social and Governance (ESG) credentials of the insurer they were placed with.

Dixon said that was important to engage the broker community so that they were “very comfortable” talking about the transition. This is because brokers sit between the insurer and customer when securing business during a time when “urgency” is needed to achieve net zero. 

By building “confidence”, brokers can then expand the ESG conversation to their customers, she said. But why should brokers make a change?

Consumer to capacity

Dixon said: “If you’re a broker and you’ve got a client in a high emissions sector, then you really need to start thinking about the fact that this is going to start impacting how you broke that risk, because insurers are going to start bringing to the table the idea that how a client is managing their path to net zero and managing their emissions down will start to become a risk acceptance factor – it will start becoming part of the insurers’ appetite.

“Other than very large corporate sectors, I don’t think that’s happening at the moment,” she added.

Swiss Re country president and chief executive of UK and Ireland Jason Richards, meanwhile, said that “multi-sector collaboration” will be key in avoiding greenwashing.

Echoing Dixon’s sentiments, KPMG partner Huw Evans said that brokers’ responsibility to get involved would increase because of their “customer knowledge” and “understanding”, in addition to “the critical role that they have in linking the insurance capacity with customer need”.

He continued: “Over the past 15 years the carriers have done more, but going forward I think it will have to be a much more equal partnership across the sector as a whole.”

Elbow room

One area of “opportunity to really engage with businesses” is the UK government’s plans to make transition plans mandatory across the economy, said Ben Howarth, manager of climate change and open data policy at the ABI.

The industry, including brokers, can therefore be “proactive” in thinking about what insurance cover customers will need in the next 10 to 15 years.

Dixon highlighted that Allianz is willing to help brokers become more confident with talking about net zero, using the firm’s Net Zero Accelerator (ANZA).

As part of developing the net zero conversation, Evans highlighted that the insurance industry, in addition to customers, also needs to take into consideration the views of campaigners.

He said: “We have to be empathetic and understand the motivations of people who would like to see our sector withdraw completely [from high emissions areas] – these are in many cases very committed activists who are genuinely scared about the world that they think they will be living in.

“Even if we don’t always agree with them, we do need to listen and use those perspectives to help inform our sense of how much urgency we build into the dialogue that we need to have with our partners.”