Insurance Europe, the European insurance and reinsurance federation, unequivocally supports the collective global momentum to combat climate change that is the focus of COP26. The European insurance industry also supports the goals of the Paris Agreement and the European Green Deal, as well as Europe’s ambitious targets to reduce its greenhouse gas emissions by 55% by 2030 and achieve a net-zero economy by 2050. 

Indeed, the need for urgent action has never been more unambiguous and, as demonstrated by the most recent IPCC report*, the costs of abatement, mitigation and adaptation measures pale in comparison to the long-term costs of unmitigated climate change. 

Insurers can play a significant role both in mitigating the worst climate-change scenarios and in helping citizens and businesses to cope with and adapt to the impacts of the changes that cannot be avoided and that will continue for many years. Insurers can do this through:

• Their capacity to take and diversify risks on behalf of customers and provide them with the financial support they need to cope with the consequences of climate change-related events. 
• Their risk management knowledge and expertise to help customers and the public sector to build risk awareness and to reduce exposure and increase resilience to the impacts of climate change, including through “building back better” approaches after damage has occurred. 
• Their capacity to invest in the transition to sustainability, as they are the largest group of institutional investors in Europe with over €10 trillion in assets. 

Insurers are already taking action and are willing to do more, as demonstrated by the initiatives and coalitions in which many insurers are participating. But to play their full part and to truly unleash the sector’s significant potential, they need governments to take actions. These include notably:

• Commitments to invest in adaptation and prevention measures. Indeed, the adaptation and prevention measures taken today will have a huge impact on what is insurable in the future.  
• Incentivising and supporting more sustainable sovereign, corporate and infrastructure projects in which insurers can invest, for instance by following and consistently applying the “polluter pays” principle on an international level, by more “crowding-in” of private capital through public-private partnerships and by better balancing of credit risk associated with infrastructure projects. 
• Regulation, including prudential regulation, that supports — and certainly does not hinder — the insurance industry’s role. 
• Policies to ensure that the transition happens in a fair and just way.  
• More public-private partnerships, as existing ones have demonstrated that sharing expertise and experience between core stakeholders in the area of climate resilience can make a difference. 
• The creation of a European ESG database so that investors have efficient access to the comparable and reliable data that they need for sustainable investing and reporting.

More information regarding the role of the insurance sector can be found in this annex, and examples of insurer actions can be found in our newly launched Sustainability Hub.

*IPCC report: “AR6 Climate Change 2021: The Physical Science Basis”, August 2021