Insuring Nature's Survival : The Role of Insurance in Meeting the Financial Need to Preserve Biodiversity

Biodiversity loss will be an increasingly important source of risk and opportunity for the insurance sector. The significant degradation of ecosystems has the potential to materially impact global finance, economies, and societies alike. Understand...

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Main Author:	World Bank
Format:	Report
Language:	English
Published:	Washington, DC: World Bank 2022
Subjects:	INSURANCE BIODIVERSITY CLIMATE CHANGE MANAGEMENT CLIMATE CHANGE IMPACT RISK MANAGEMENT ENVIRONMENTAL PROTECTIONS
Online Access:	http://documents.worldbank.org/curated/en/099850304272234140/IDU02b17904f04af504b8f087f708041ff6d79d4 http://hdl.handle.net/10986/37437

id	okr-10986-37437
recordtype	oai_dc
spelling	okr-10986-374372022-05-14T05:10:52Z Insuring Nature's Survival : The Role of Insurance in Meeting the Financial Need to Preserve Biodiversity World Bank INSURANCE BIODIVERSITY CLIMATE CHANGE MANAGEMENT CLIMATE CHANGE IMPACT RISK MANAGEMENT ENVIRONMENTAL PROTECTIONS Biodiversity loss will be an increasingly important source of risk and opportunity for the insurance sector. The significant degradation of ecosystems has the potential to materially impact global finance, economies, and societies alike. Understanding the physical and transition risks associated with biodiversity loss and working to mitigate the damage to biodiversity will be a key aspect of meeting the targets set by the Paris Agreement. Insurance companies will be impacted by biodiversity risks in several ways: as underwriters, as investors, and as corporate citizens. Insurers will be impacted both by changes in climate and biodiversity and by transition risks affecting the risks they insure or the investments they make. Insurance can promote investment in biodiversity in three ways: (i) asset protection, (ii) liability reduction, and (iii) facilitation of capital inflow from the financial markets. Ideally, efforts to protect biodiversity will include a combination of instruments, not only insurance. Insurers, as investors, can contribute directly to the preservation of biodiversity by channeling capital towards biodiversity-positive investments, but the opportunities to do so are still limited. The G20 Sustainable Finance Roadmap (G20 SFWG, 2021) highlighted the need to integrate nature and biodiversity in future work on sustainable finance. The financial materiality of underestimating or inaccurately pricing biodiversity-related risks could pose a threat to the solvency of the insurance industry and lead to an increase in exclusions of uninsurable risks. Risk management can be enhanced by combining the results of both catastrophe and climate risk models, but more needs to be done to incorporate biodiversity risk. Combining ecological action with financial protection can make good economic and financial sense and help overcome the pricing issues associated with risks such as wildfire. 2022-05-13T17:37:05Z 2022-05-13T17:37:05Z 2022-04-27 Report http://documents.worldbank.org/curated/en/099850304272234140/IDU02b17904f04af504b8f087f708041ff6d79d4 http://hdl.handle.net/10986/37437 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank Washington, DC: World Bank Report Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	INSURANCE BIODIVERSITY CLIMATE CHANGE MANAGEMENT CLIMATE CHANGE IMPACT RISK MANAGEMENT ENVIRONMENTAL PROTECTIONS
spellingShingle	INSURANCE BIODIVERSITY CLIMATE CHANGE MANAGEMENT CLIMATE CHANGE IMPACT RISK MANAGEMENT ENVIRONMENTAL PROTECTIONS World Bank Insuring Nature's Survival : The Role of Insurance in Meeting the Financial Need to Preserve Biodiversity
description	Biodiversity loss will be an increasingly important source of risk and opportunity for the insurance sector. The significant degradation of ecosystems has the potential to materially impact global finance, economies, and societies alike. Understanding the physical and transition risks associated with biodiversity loss and working to mitigate the damage to biodiversity will be a key aspect of meeting the targets set by the Paris Agreement. Insurance companies will be impacted by biodiversity risks in several ways: as underwriters, as investors, and as corporate citizens. Insurers will be impacted both by changes in climate and biodiversity and by transition risks affecting the risks they insure or the investments they make. Insurance can promote investment in biodiversity in three ways: (i) asset protection, (ii) liability reduction, and (iii) facilitation of capital inflow from the financial markets. Ideally, efforts to protect biodiversity will include a combination of instruments, not only insurance. Insurers, as investors, can contribute directly to the preservation of biodiversity by channeling capital towards biodiversity-positive investments, but the opportunities to do so are still limited. The G20 Sustainable Finance Roadmap (G20 SFWG, 2021) highlighted the need to integrate nature and biodiversity in future work on sustainable finance. The financial materiality of underestimating or inaccurately pricing biodiversity-related risks could pose a threat to the solvency of the insurance industry and lead to an increase in exclusions of uninsurable risks. Risk management can be enhanced by combining the results of both catastrophe and climate risk models, but more needs to be done to incorporate biodiversity risk. Combining ecological action with financial protection can make good economic and financial sense and help overcome the pricing issues associated with risks such as wildfire.
format	Report
author	World Bank
author_facet	World Bank
author_sort	World Bank
title	Insuring Nature's Survival : The Role of Insurance in Meeting the Financial Need to Preserve Biodiversity
title_short	Insuring Nature's Survival : The Role of Insurance in Meeting the Financial Need to Preserve Biodiversity
title_full	Insuring Nature's Survival : The Role of Insurance in Meeting the Financial Need to Preserve Biodiversity
title_fullStr	Insuring Nature's Survival : The Role of Insurance in Meeting the Financial Need to Preserve Biodiversity
title_full_unstemmed	Insuring Nature's Survival : The Role of Insurance in Meeting the Financial Need to Preserve Biodiversity
title_sort	insuring nature's survival : the role of insurance in meeting the financial need to preserve biodiversity
publisher	Washington, DC: World Bank
publishDate	2022
url	http://documents.worldbank.org/curated/en/099850304272234140/IDU02b17904f04af504b8f087f708041ff6d79d4 http://hdl.handle.net/10986/37437
_version_	1764487070747721728

Insuring Nature's Survival : The Role of Insurance in Meeting the Financial Need to Preserve Biodiversity

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