Climate Change Insurance: Missing In Action

Poor insurance penetration and the economy's continuing reliance on fossil fuel have made underwriting sustainable businesses a non-starter

- Subhomoy Bhattacharjee

Climate change and the risk associated with it is a major topic that is cussion on climate issues was conspicuously low-key at a meeting of global insurance mavens in New Delhi last week to decide their priorities for the year and possibly for the decade.

For the Institute of Actuaries of India, the experts who figure out what premium to charge for a risk, their list of priorities included the need for insurance and pension industries as well as actuaries to look holistically at products, regulation, and policy against the backdrop of changing consumer needs. Somewhere in the list at the Global Conference of Actuaries hosted in New Delhi by the India-based Institute of Actuaries, climate change did surface, but this was clearly a proforma issue.

R Arunachalam, president of the Institute of Actuaries of India, told Business Standard that climate change issues are important, they follow the others. "Insurance actuaries are aware of the risks to create products that will drive a solution-oriented resolution." He is not alone. Next month, industry chamber Ficci shall host its annual insurance conference. A key objective for the ongoing regulatory reforms, the agenda acknowledges, is driving insurance penetration. India has a massively underserved insurance business so spreading the wings of the sector to draw in more business is important.

"We are keen to follow the government's priorities. There is a vast need to increase the level of insurance penetration," said Tapan Singhel, managing director and CEO of Bajaj Allianz General Insurance Company Ltd.

This is not surprising but different from the concerns of developed economies. In both the US and Europe, insurance is now playing an evangelical role in steering the industry towards the development of sustainable products.