Majority of the world's energy is still dominated by non-renewable sources such as coal, oil and gas. While there are some insurers who have stopped covering unsustainable energy projects, the dependence on traditional energy sources ultimately requires coverage.
“The way forward for all insurance companies is that there's no option other than to stop insuring situations where we are heading for trouble. By 2050, we will have nearly half of the world's energy requirement coming from renewable sources. If that is so and today, we stop insuring the thermal based or geo-based power plants, what happens to these 25 years that we have in between? We need to have some sort of a stopgap arrangement - a slow process that gives time to particularly developing nations that they should be able to switch over from a traditional mode of power generation to a renewable source,” said Risk Management Association of India associate professor Pratik Priyadarshi speaking at the Asia Nat Cat and Climate Change Conference.
He said efforts have been made to develop parametric insurance solutions which are catering to some of the requirements to address climate change. However, he said more ‘green insurance’ policies which give back to nature are needed. “The biggest challenge is that we have not been able to support such green policies being issued across the globe. We need to give more right now before it's too late,” he said.
Climate crisis in sight
He said agriculture is one of the areas which is deeply affected by the climate change and it has been being affected by new strains of such viruses and bacteria that are coming across through migration and travel.
He said, “Groundwater levels are depleting, it’s drying up and one of the most common ailments across the globe, malaria, is going to spread. It could be one of the worst killers that we are aware of. Livestock crops becoming more susceptible to disease and climate change and movement of population due to scarcity.”
“The time has gone when we refer to this as climate change, now we are in a situation where it is more of a crisis that is happening at hand,” he said.
The Asia Nat CAT Climate Change Conference, which ran from 26 to 27 September, was sponsored by Guy Carpenter and organized by Asia Insurance Review. The two-day event returned to a live setting at Singapore’s Grand Copthorne Waterfront Hotel with the theme: ‘Unmask the Possibility’