Bringing the industry’s voice to the table – Aon’s Emma Karhan reflects on COP26

As COP26 discussions came to a close last week in Glasgow, Aon’s Emma Karhan believes the event has helped highlight the important role the insurance industry has to play in helping mobilise capital to address challenges posed by climate change.

And she said the industry could still play a greater role in helping accelerate progress at a multilateral level around some of the key issues to emerge from the two weeks of discussions.

Karhan, who heads up the public private partnerships unit at Aon’s Reinsurance Solutions UK, said one of the broker’s critical objectives at the event was to raise the profile of the industry in these discussions, where traditionally it “hasn’t been at the table enough”.

“If the banks are there and financiers are there, then insurers should be there as well as we have a huge role to play in mobilising private capital,” she said.

“We wanted to emphasise the industry’s role in managing, understanding and analysing risk. Money does not get invested without a view on risk and we wanted to highlight that.

“We also wanted to emphasise that no one can do it alone. This cannot be on the shoulders of just the private sector or one part of it, or government, or science – this has to be a collaboration. We have to be really grown-up about what that collaboration looks like and how it works across different sectors and business models.

Karhan said initiatives such as the Insurance Development Forum and the Sustainable Markets Initiative had helped raise the industry’s profile but believes the industry still does not have the voice it should have in these discussions.

“No one understands the idea of climate change better than the insurance industry,” she said. “We need to collectively raise the profile of the industry making sure we are involved in these discussions and that we fulfill the role of de-risking investment and accelerating the energy transition.”

Another area Karhan feels requires further discussion is around how to build demand for disaster risk financing tools in some of the most vulnerable countries.

“The IDF does a terrific job in trying to build that confidence but we need to think that there are other supporting systems that we can bring in to help that process,” she said.

Karhan also believes governments will need help to advance many of the discussions held at COP26 to the next stage.

“We have to work with them to accelerate some of the ideas and the technology and make it attractive and incentivise people to take risk in investment around climate change.”