Insurers call for PPPs to manage the move to green economy

The transition from the current economy to a greener alternative will need government support and greater involvement from insurers in order to avoid an energy crisis.

This was the conclusion drawn from a panel session held at the Pan-Asia Risk & Insurance Management’s (PARIMA) annual conference.

The session was titled ‘Brace for impact: managing the risks behind megatrends’ and inevitably touched on the need for public-private partnerships (PPP) to successfully navigate the largest exposures facing companies and society.

The move to a sustainable economy and an energy strategy based on renewables rather than fossil fuels was identified as one of the four megatrends facing Asian economies – not least because the region will face a growing demand for energy due to a rapidly rising population and ongoing economic and industrial growth.

“These green energy projects can’t stand on their own,” said Willem van Wyk, regional market manager, ASEAN and Australasia HDI Global SE. “They need government support.”

He also highlighted the insurance industry’s poor record on coverage for renewable projects. “Renewable energy has not been a profitable area for insurers,” said van Wyk. “Only 35% of insurers work with renewable energy projects but as governments subsidises these projects, so will insurance become subsidised.

“Many European countries are no longer financing coal and that trend will continue. We are in a transition period and the insurance industry is not reacting quickly enough and will have to move faster,” said van Wyk.

The danger is that an energy crisis could arise in the region as insurers move away from coal-based energy but do not move quickly enough into renewable energy areas, said van Wyk.

The call for greater collaboration between insurers and governments and greater use of PPPs was supported by Edward Ler, executive vice-president and head of southeast Asia at Chubb.

“All of us in the risk management market have to be better users of insurance,” said Ler. “We are well equipped with risk insights but we also have to work better with governments on some of these issues.”