2023 in review: this year’s key developments

As 2023 began, ESG Insurer set out five key themes for the year ahead, leading off the need for longevity and transparency in net-zero commitments.

This followed the launch of the first version of the Net-Zero Insurance Alliance (NZIA)’s Target-Setting Protocol – described as a “landmark breakthrough” which for the first time allowed (re)insurers to measure greenhouse gas emissions associated with their underwriting activities.

The NZIA was at this stage still expanding, having welcomed IAG as its 29th member during July 2022.

January’s headlines also included the launch of a global climate business unit at Chubb, Aviva’s expansion into the offshore wind market, and Chaucer’s backing of Kita’s carbon purchase protection cover with lead underwriting capacity.

In February Axa XL launched a new three-year sustainability strategy focused on valuing nature, addressing climate change and integrating ESG factors into its business operations. Axis and Chaucer both updated sustainability strategies during the course of the month.

February also saw Howden join the UN Capital Development Fund as a private sector partner within the fund’s Pacific Insurance and Climate Adaptation Programme – the first of several initiatives in the space by the expansive broker in 2023.

March saw several key announcements, including Hiscox’s plans to launch an ESG sub-syndicate, initially within its flagship Syndicate 33.

Guy Carpenter and Swiss Re joined forces to launch a new pilot program to provide up to $1.1mn in emergency funding following a major flooding event in New York City.

The pilot was notable as it introduced the concept of community-based insurance – effectively selling to a vulnerable community rather than trying to sell flood insurance on a one-to-one basis.

Munich Re, Swiss Re, Beazley and Chubb were among those to provide updates on ESG strategies during the month as part of their annual reports.

Munich Re hit the headlines again in late March when it became the first carrier to withdraw from the NZIA. The reinsurer cited “material antitrust risks” in collective approaches to decarbonisation.

Zurich and Hannover Re had followed by late April, and the situation deteriorated the following month when a group of 23 US state attorneys general wrote to NZIA members voicing antitrust concerns around the Target-Setting Protocol.

The implosion then began to gather pace, with over half of the NZIA’s members departing by mid-June, including six of its founders.

The departure of Axa was particularly notable as the French carrier had chaired the initiative since it was convened in 2021.

By early July, the NZIA ditched its requirement for remaining members to publicly set or publish targets related to the decarbonisation of their underwriting portfolios.

The near-collapse of the NZIA overshadowed several other important developments during the summer months.

In a major statement of intent regarding its aspirations in the climate risk and resilience space, Howden unveiled the appointment of Rowan Douglas, formerly with WTW, in late June.

Lloyd's carrier Inigo partnered with conservation non-profit 90 North Foundation in July to support academic research into the impacts and risks associated with melting sea ice in the central Arctic Ocean.

And Munich Re Specialty Group appointed Parhelion founder Julian Richardson as chief underwriting officer for its Green Solutions portfolio.

One of the year’s most notable transactions was unveiled in August when eight carriers collaborated to provide reinsurance for a $500mn debt conversion project that is expected to generate $163mn in dedicated marine conservation funding in Gabon over the next 15 years.

Among this year’s other innovative solutions, WTW launched a four-peril parametric product to protect Sri Lankan shrimp farms operated by Taprobane Seafood Group against weather risks.

And climate-focused parametric insurtech Arbol expanded into the UK with the launch of a London-based MGA, in a move which will allow the firm to service the international insurance market outside the US.

In September, the Lloyd’s Market Association announced the launch of its ESG Academy, to provide training for individuals within the Lloyd’s market and the wider global (re)insurance sector.

The ESG Academy was launched in collaboration with Better Insurance Network, which had created a training platform to provide a practical understanding of insurance sustainability.

Ahead of COP28, Howden and the University of Cambridge Institute for Sustainability Leadership co-proposed an umbrella stop-loss mechanism to leverage ~$1bn of donor-supported annual pure premium to protect the top 30 smallest and most climate-vulnerable countries from future climate shocks.

The proposal would leverage donor funding to unlock “vast sums” from (re)insurance and capital markets to provide guaranteed financial protection to exposed communities now and through to at least 2050.

COP28 also saw the UK Blue Planet Fund announce financing for 12 projects designed to build ocean and coastal resilience, including a partnership with the UN Insurance & Risk Financing Facility and Swiss Re to create parametric and hybrid insurance products to protect and restore Indonesian coral reefs.

Look out for next month’s edition of ESG Insurer in which we will preview the likely themes for the year ahead…