Page 7 - October 2022 Issue 611 Part 2

Aon: More capital is required to address the

societal challenges of climate change

In order for the insurance and reinsurance industry to address the societal challenges of climate change, more cap-
ital is going to be required and the sector capacity base needs to change forever, Aon CEO Greg Case said.
Case explained that there is a generational opportunity facing the assembled senior insurance and reinsurance

market executives. “We’re about to continue on a journey that’s going to literally define the relevance of risk Greg Case
capital for the next 30 years”, adding that climate change has got to be a priority in every way, shape, or form

and is going to drive the largest relocation of capital in history. He highlighted the importance of delivering value

to clients of the industry and cited some concerns he has that clients currently feel the industry is too defensive.

Case said that the industry can be viewed as defensive, or “leaving the playing field” by clients and stakeholders, meaning there is a lot to do if insurance and reinsurance can

demonstrate its relevance here. Capital is key though and Case believes the industry needs to work to mobilize it, in significant volumes, to address issues like climate change.

He highlighted exclusionary language and climate-related triggers in contracts as well as reinsurers exiting complete geographies when the impacts in certain

areas become too expensive to manage

Case cited risk placement as a percentage of GDP as a key metric that demonstrates the relevance of the industry. This has fallen since the mid-1990’s he

explained, as the industry has failed to address many emerging issues.

He added that clients complain the industry is taxing the transition and making it more difficult for companies to reach their net-zero aspirations, often through opt-

ing out of entire sectors such as fossil-fuel-based energy production. He also said that clients are ignoring the things that could be catalysts to improve climate

change protection and mitigation, noting that for many large-scale climate-related risks, the role of states as facilitators was essential.

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139 AL BAYAN ECONOMIC MAG - ISSUE 611 - OCTOBER 2022