Frankfurt German insurers want to play an important role in the sustainable transformation of the economy. As institutional investors, they have recently made great efforts to make their investments more climate-neutral and to align them with ecological, social and ethical criteria (ESG). In the insurance business, on the other hand, brokers and companies still see a clear need to catch up.
“Industrial insurers seem to be more concerned with wanting to positively influence their public image of ESG and less concerned with really supporting the transformation of the industry,” complains Patrick Fiedler, board member of the General Association of Insurance Companies (GVNW).
However, there can only be progress in the green transformation if it is also insured, says Thomas Olaynig, who heads the Corporate Risk & Broking department in German-speaking countries and Poland at the consulting firm WTW. “Insurers should show more courage to accompany the change of the companies.”
His colleague Stefanie Schriek, who is responsible for insurance consulting at WTW in Germany, adds that the insurers have already specified more precisely which sectors and companies they want to invest in from a sustainable perspective. In the actual insurance business, however, there is still far too little.
It is not possible for insurers to simply rule out certain risks and “on the one hand no longer want to insure coal projects and on the other hand say that offshore wind turbines are also too risky for them,” says Olaynig. It is time for insurers to deal more with these new risks.
The insurance association GDV does not consider this criticism to be justified. “German insurers have been working intensively on insuring large-scale sustainable projects for years and have built up a great deal of know-how here,” says GDV General Manager Jörg Asmussen.
Lack of insurance capacity is the main point of criticism
For GVNW board member Fiedler, who represents the interests of the companies, the lack of insurance capacity is the biggest point of criticism. For example, he observes that the capacities are limited or completely eliminated if the insured companies are or were active in the coal or mining sector.
In the case of coal, oil and gas, insurers usually talk a lot about what they no longer want to insure and when. “We only see a negative connotation, punitive behavior on the part of insurers,” says Fiedler. “What we miss is a positive approach to transformation with the courage to take risks.”
A spokesman for Zurich Germany admits that exclusion criteria have been defined for the areas of coal, oil sands and shale oil as well as drilling and extraction of oil and gas.
However, it is not expedient to rule out entire sectors before there are sustainable alternatives for individual technologies on the market: “We therefore accompany and support our customers, even in sectors that are currently still CO2-intensive, on their transformation path to a sustainable economy.”
According to Fiedler from the GVNW, companies sometimes do not receive insurance cover, even with ambitious transformation plans, although “particularly in such situations, special support from insurers would be desirable from a social perspective”.
Conflicting goals are also often overlooked, for example when copper mines are not insured for environmental reasons, but no wind farms can be built without copper.
According to Schriek, companies in many industries are trying to establish more environmentally friendly production processes with fewer CO2 emissions. However, insurers have not yet adequately adjusted to the fact that this would also result in many new risks with unknown frequency and severity of claims. “When companies want to insure new risks, the providers often do not manage to set adequate prices for this,” says the consultant.
Companies want more support for energy transition projects
Companies also do not feel that they have enough support when it comes to insuring renewable energies. Fiedler says: “We see a reluctance on the part of some large industrial insurers to insure offshore wind farms and solar parks at all.” This can be explained by the fact that there is insufficient damage data and empirical values for such new technologies.
However, GDV General Manager Asmussen replies that the insurance industry supported energy transition projects despite the initially very high loss ratios and accompanied them with appropriate insurance cover – and continues to do so. In the meantime, the damage ratios have improved through advice and joint work with property developers.
Renate Strasser, board member at the Allianz subsidiary AGCS, sees the expansion of renewable energies and the associated infrastructure as “a relevant loss activity that will also continue to increase due to climate change and increasing natural hazards such as hail, floods or storms”.
According to Strasser, AGCS wants to actively support the transition to a low-carbon economy and the expansion of renewable energies, but at the same time must not lose sight of profitability in order to be able to support customers in the long term. As an industrial insurer, you have to calculate the prices according to the respective risk.
More: Large claims are becoming increasingly difficult to calculate – insurer Zurich is increasingly focusing on prevention
