Guest post by Femke Bartels, Global MD at THNK School for Creative Leadership.
Climate change: How the insurance industry could – surprisingly – help.
The climate crisis is accelerating. During the last year, we’ve been confronted with floods, cyclones, droughts and wildfires. The frequency and severity of extreme weather events is increasing and it is putting millions of people at risk. And I find myself astonished to say that I believe the insurance industry can play a big role in helping them.
Torrential hurricanes, ravaging heat waves and devastating droughts claim lives and threaten livelihoods. Humans have caused major climate changes to happen already, and we have set in motion more changes still. We have to stop heating up our planet. At the same time, we also have to deal with the consequences of the warming that we have caused so far.
My natural stance when it comes to the insurance industry is scepticism, and I believe I am not the only one. I have dedicated my whole career to help solve society’s biggest problems, whether it was in my role as Executive Director of Greenpeace Mexico, as visiting professor at UCLA working with the Promise Human Rights Institute, or in my current role as Managing Partner at THNK school of Leadership. If you would have asked me a couple of years ago, I would have laughed at the idea of working with insurance people in their opaque world. They seemed to be part of the problem, not part of the solution.
It was only when Stephen Brittain, co-founder of Insurtech Gateway, asked me to join as Board Advisor for ESG & Impact that I started to see what could be achieved by combining forces.
Insurtech Gateway was created to build and scale new insurtech ideas. It has been supporting early-stage tech founders with everything they need to get up and running. Insurtech is connecting the technology sector with the insurance sector. In our conversations Stephen and I started to explore what it could look like if we added impact to the mix.
What would happen, we mused, if insurtech ventures would focus on climate impacts? This is when my heart started to beat faster. When severe climate events occur, vulnerable communities are often left behind. They enter a damaging feedback loop where they lose their houses and businesses, which leads to financial backsliding and fewer insurance options. As a consequence it leaves them with limited capacity to recover. Insurtech can be a solution to create greater resilience. It can support recovery from climate disasters, for instance by immediate pay out. Other opportunities are to help buffer future impacts by providing incentives that will help to limit the damage, such as fortifying houses and better building and land-use strategies.
Floodflash, one of The Gateway’s portfolio companies, is a good example. They are making flood insurance available and affordable to small businesses who were previously struggling to get cover. When a flood does hit, they pay the agreed compensation in just a matter of hours. This rapid payout enables businesses to get back up and running quickly, minimising disruption and revenue loss. You can see how this kind of product could have a big impact on the speed of recovery if distributed to vulnerable communities. And this is only the start: imagine what similar initiatives for wildfires, ice storms and hurricanes could do.
Change in action
We see a lot of potential for the impact and the insurtech communities to work together to protect the most vulnerable people being affected by climate change. Climate change is happening today, so we have to build a more resilient tomorrow.
Gateway is hosting the first of a series of events exploring this space on the 29th of September and is inviting entrepreneurial founders, impact investors and changemakers in the climate resilience space to join. We are bringing together people from diverse backgrounds to find common ground. With the aim to get more startups involved in protecting people against the devastating damages of climate impact. I will be there. I hope you will too.
Check out the Agenda and Register here.