Earlier this month, Aviva announced that it would implement the “ultimate sanction” and drop stakes in 30 of the world’s largest oil, gas and mining companies unless they did more to tackle climate change. As part of the investment group’s climate engagement escalation programme, said companies are being called to set net zero emissions and integrate climate risks into their strategy.
This move is evidence of the insurance sector’s commitment, at least publicly, to address climate change’s impact on the insurance market. In Deloitte’s insurance outlook survey for 2021, 77% of the 200 industry leaders polled said their insurers are reprioritising environmental, social, and governance issues going forward.
To get an idea of how UK insurers are perceiving this societal and sector-wide change, Insurance Wire caught up with Steven Darrah, CEO of European Technology Risks (ETR), to discuss how the industry is accommodating eco-friendly good business practices among clients and to find out where improvements need to be made.
Can you tell us a bit more about ETR? What sort of services or coverage do you provide for companies?
We are an insurance broker in our most basic form. We focus entirely on high growth businesses in the UK, but we’ll soon be branching into Europe and beyond. We provide business insurance and only work with businesses that aren’t harmful to the environment as well, so we turn away gas companies and the like.
Have you seen an uptake in the number of companies approaching you for coverage and assistance in support of eco-friendly policies?
We’re growing as a business and we do offer a 10% discount to businesses that are openly green. We have a good flow of inquiries from that. A plant meat company, one of our clients, was attracted to us for that reason.
We are seeing a shift within UK businesses in general to become more sustainable, to take more care in what they do and how they go about that work. One of our clients is called Rubies in the Rubble, a food producer that creates food from throwaways that farmers use in Farmers’ Markets. We are seeing more and more businesses that are utilising their sustainable nature to grow their business, which is really great to see. For us, our core focus is on those businesses.
How has ETR shifted its policies to encourage eco-friendly good practice among its clients and potential clients?
At the start of the year, we launched our eco initiative that sees us plant a tree for every policy that is purchased. That includes existing clients and new clients as well.
Since the start of the year, we’ve planted over 240 trees. We’re looking to do 2,500 more by the close of the year, so. So every time someone uses our services, we plant a tree to thank them for that.
What improvements do you think the insurance industry needs to make in helping eco-friendly businesses?
Quite frankly, I don’t think the insurance industry has done enough at all. I actually think that the efforts that are being made now are far too late. If you consider that the insurance industry over the last three to four years has paid out nearly a trillion in losses due to the result of weather disasters; the bushfires in Australia, for example. That cost the industry $100bn.
Hurricane Michael in the States cost insurers $15-20bn. Considering we are an industry which is constantly affected by bad weather and poor climate, the fact that we’re only just addressing this now is not good.
From our point of view, our industry is dramatically affected by insurance premiums that are rising. Flood protection in the UK is so hard to come by in fact, it was so hard to come by that Flood Re had to be created to help people afford insurance on their houses.
That sort of stuff is ridiculous. We’re one of the main industries affected by climate. The fact that nothing’s been nothing has been done of dramatic effect is appalling, in my opinion.
Do I think enough is being done? No.
Do I think the work that has been done recently is impactful? To some extent, yes.
But it should be done more. In truth, insurance and banking should be driving and leading that change. I’m hoping that the work that’s being done today is going to continue, and I hope that we continue to push forward on this sort of new change.
Has there been any particular industries that have approached you specifically for climate coverage?
We’ve got a few clients that work in energy. One client, based in Scotland, is producing high energy sustainable batteries that will then be used in electric cars and the like.
Another client is creating graphic material that will be used in some high energy situations that will then improve the use of sustainable energy moving forward.
In terms of the biggest and most impactful inquiries that we’ve had, it’s definitely been in energy, which is great for us. We also have a lot of retailers now that use sustainable goods. Retailers are really taking a sustainable approach to everything that they do.