Munich Re is prioritising providing the financial support that will be required to achieve “true breakthroughs” in the development of low-carbon technology as the reinsurer moves towards a greener future, according to chair of the board of management Joachim Wenning.
Wenning said insurance was the “enabler of technological innovation” and that the financial sector would play a key role in global ambitions to limit global warming.
The executive was speaking at a press conference in Glasgow’s Kelvingrove Museum as part of the COP26 summit, which has drawn political leaders and business chiefs from across the globe.
“It is a good thing the role of business and the context of climate protection is being discussed here in Glasgow, and one of Munich Re’s priorities is to help new technologies for a low-carbon economy achieve true breakthroughs,” he said.
The executive claimed risk carriers could help remove investor and developer uncertainty over renewable technology.
“If this risk is diversifiable – meaning it is not one event that will cause a loss everywhere, which would also be too much for a risk carrier – then it is insurable, and we are very happy to do this insurance,” he said.
He said there were fewer renewables projects underway than the carrier would like.
On investments, Wenning said the number of green investment opportunities accessible for insurers was lower than demand, and that the switch to green investments must be transitional – otherwise, low-carbon investments will become “inflated and overvalued”.
He said insurers had to deal with “a patchwork of different sustainability measurements” from a variety of stakeholders, and that such requirements were “increasing very rapidly”.
“It has become pretty painful to fulfil all those,” he said, adding that uniform standards would make sense but take a long time to achieve.
Wenning acknowledged that the transition to a low-carbon economy would be “very, very costly” and the costs would be borne by individuals, businesses and nation states.
“Financial hardships will occur, and they will occur for lower-income people, and the states need to take care of this,” he said.
Quizzed on whether insurers risked creating a protection gap with a rapid shift away from fossil fuels, chief climate and geo scientist at Munich Re Ernst Rauch said early client engagement was essential.
“We make it very clear to our clients and stakeholders well in advance our target is to phase out and reduce our carbon footprint, and phase out certain covers,” he said.
“And that allows us to engage with our clients, with our stakeholders, inform them in trying to find solutions if they are also serious to go on this transition pathway.”
