Private and public sectors have to work together globally to address risks
The finance and insurance sectors need to work in collaboration with governments and non-governmental organizations in mitigating the risks of climate change.
That’s the rallying call from global services firm Aon at its inaugural "Collaborating to close the protection gap" conference in London.
The firm, which provides solutions for risk, retirement, and health, says that the industry needs to collaborate with the public sector amid rising losses from natural disasters.
The goal is to close the gap between the insured and uninsured to protect global communities and build scalable solutions through shared experiences.
"The protection gap places an immense financial strain on governments, businesses, communities and individuals,” noted Greg Case, CEO, Aon plc. “Yet, financial impact is only one aspect of the toll these disasters inflict. We also must consider the profoundly troubling humanitarian and social impact – lives lost, communities compromised and businesses, as well as individual livelihoods, disrupted.”
Case continued that the magnitude of the issue is too large for one sector to tackle in a silo but he says that by collaborating, there can be improvement.
“We have absolute conviction, though, that, collectively, we can make a difference. Our hope is that we will forge a shared commitment to new ways of collaborating that will allow us to build resilience at scale," he said.
Huge losses
Aon’s research shows that devastating natural disasters around the world caused economic losses of U$232 billion in 2019.
But only $71 billion of this was covered by insurance, leaving the protection gap of 69%. Over the last decade, the protection gap reached 72%.
Speakers at the conference included Marisa Drew, CEO – Credit Suisse Impact Investment and Advisory, and David Lomas, Managing Director at BlackRock.
"Our vision is of a world where every community is resilient to the impact of the climate crisis, both today and in the future. With a presence in almost every country in the world, we see first-hand the humanitarian impact of increasingly volatile weather,” said Simon Meldrum, Innovative Finance Specialist, British Red Cross. “We are now starting to explore new ways of working with private sector partners and pilot some exciting initiatives such as insurance linked securities or catastrophe bonds because we believe that cross-sector collaboration with governments, the insurance sector and non-governmental organisations will be critical to shifting the dial in the humanitarian response."
Conference attendees were also shown a video message from HRH The Prince of Wales:
