Speech given by Maryam Golnaraghi, Ph.D. at the 2017 Global Insurance Symposium.

1. Maryam Golnaraghi, Ph.D.
Director of Extreme Events & Climate Risks
Program
Global Insurance Symposium(GIS)
Des Moines, Iowa
25-26 April 2017
Latest developments and trends related to
climate change: What does it mean for the
insurance industry?

2. Agenda
2
1 The Geneva Association at a glance
2 Defining Climate Risk
3 Latest Policy, Regulatory, Financial and Market Developments related
to Climate Change
4 What does it mean for the insurance industry?
5 Geneva Associations’ Strategy and Policy Research
6 Key take-aways

3. Founded in 1973 with CEO membership only (primary insurers and reinsurers)
Leading international think tank in insurance, risk management and economics
Conducts policy-based research and facilitates high-level dialogue on key strategic
issues engaging the industry, broader finance sector, governments and regulators
Direct interaction with a broad spectrum of stakeholders: Governments, central banks,
relevant international organisations such as IAIS, FSB, G7 and G20, World Bank, OECD
and the UN
Unique peer group forums for C-Suite executives in insurance: General Assembly (CEOs
only) and annual meetings for CFOs, CROs, CIOs and Chief Economists
3
1. GA AT A GLANCE: A GLOBAL ORGANISATION EXCLUSIVELY FOR INSURERS
Source: GA

4. 4
1. GA At A GLANCE: A GLOBAL MEMBERSHIP OF (RE)INSURANCE CEOS
Growing membership in USA and Asia
Europe and
the Middle East
50%
Asia and
Australia
20%
Latin America
and Bermuda
10%
USA and
Canada
20%
Source: GA

5. 5
1. GA AT A GLANCE: BOARD OF DIRECTORS
Chairman Vice-Chairmen
Board members
Mr Mike
McGAVICK
XL Group
Mr Oliver
BÄTE
Allianz
Mr Shuzo
SUMI
Tokio Marine
Holdings Inc.
Mr John
STRANGFELD
Prudential
Financial Inc.
Ms Inga
BEALE
Lloyd’s
Dr Mario
GRECO
Zurich Insurance
Group
Dr Nikolaus
VON BOMHARD
Munich Re
Prof Denis
KESSLER
SCOR SE
Mr Mark
WILSON
Aviva plc
Mr Patrick
DE LARRAGOITI
SulAmerica
Dr Yan
WU
PICC
Mr Alexander
WYNAENDTS
Aegon N.V.
Mr Donald
GULOIEN
Manulife Financial
Corporation
Mr Peter
HANCOCK
AIG, Inc.
Mr Christian
MUMENTHALER
Swiss Re
Treasurer
Mr Philippe
DONNET
Assicurazioni
Generali SpA
Mr Charles
BRINDAMOUR
Intact Financial
Corporation
Mr Thomas
BUBERL
AXA

6. 19 November 2015
The Geneva Association issued its Climate Risk Statement, a commitment to
progress on climate resilience and adaptation signed by 68 chief executive
officers of the global (re)insurance industry.
Unprecedented consensus but need for clear industry-level messages,
priorities, initiatives
Some Highlights:
6
1. GA AT A GLANCE: THE GENEVA ASSOCIATION CLIMATE RISK STATEMENT
Investment in research and Knowledge Sharing: Risk Modeling,
Risk Pricing, Prevention, etc.
Product innovation, market development, claims settlement to
build resilience and to encourage transitioning to low carbon
economy.
Adaptation and mitigation strategies and their cost/benefits and
building partnerships with the public sector.
Insurance products , investment strategies to support low-carbon
energy encourages mitigation and adaptation efforts, such as
investing in low-carbon energy projects.
Link to the GA Climate Risk Statement: https://www.genevaassociation.org/media/934317/geneva-association-commits-statement.pdf

7. Geneva Association’s Approach:
7
1. GA At A GLANCE: Extreme Events and Climate Risks Program Approach
Insights: Policy-related research
• C-level and Expert engagement
• Cooperation with other sectors
Strategic priorities & themes
Influencing: High-level dialogues
and facilitation of PPPs for action
High-level stakeholder
consultations
• Govt., regulators, IGOs, etc.
CEO-Level
engagement &
consultations
Underpinning research:
Evidenced-based
Recommendations
Link to the GA Climate Risk Statement: https://www.genevaassociation.org/media/934317/geneva-association-commits-statement.pdf
Institutional and
Expert Support:
Extreme Events
and Climate Risk
Working Group
and Thematic
Experts Task
Teams engaging
leading experts
from GA
members and
external experts

8. Physical risks: Impacts of climate- and weather-related events, such as
floods and storms on property, infrastructure, supply chains and trade
Liability risks: Impacts arising if parties who have suffered loss or damage
from the effects of climate change seek compensation from those they hold
responsible.
 Such claims could come decades in the future, but have the potential to hit carbon
extractors and emitters – and, if they have liability cover, their insurers – the hardest”
Transition risks: Impacts and financial risks arising from the process of
adjustment towards a lower-carbon economy.
 Changes in policy, technology and physical risks could prompt a reassessment of the
value of a large range of assets as costs and opportunities become apparent (stranded
assets)
Reputation risks: Companies exposed to any of the above risks may suffer
reputational risk if brand names are associated with climate-related
damages or perceived mismanagement of the above risks (Zurich and Ceres Report
2010). and Zurich Report 2011)
8
2. Defining Climate Risk - Linkage to Financial and Economic Risks
Source: Speech by: Mark Carney, Breaking the tragedy of the horizon - climate change and financial stability (29 September 2015,
at Lloyd’s of London) and Ceres and Zurich Report 2011)
MarkCarney,Sept.2015,TragedyofHorizonSpeech

9. 9
2. DEFINING CLIMATE RISKS: PHYSICAL RISKS – A GLOBAL VIEW
TREND OF RISING WEATHER-RELATED ECONOMIC LOSSES AND UNINSURED LOSSES
Natural disaster losses worldwide (1980-2015)
On average, insurance protection gap in high-, middle- and low-income
nations, has been estimated to be around 70 per cent for weather-related
and 75 per cent for all natural hazards.
Link for the report: https://www.genevaassociation.org/media/952146/20160908_ecoben20_final.pdf

10. 10
2. Defining Climate Risks - Physical Risks – Key drivers of increasing economic impacts
Changing characteristics of weather-and climate related-hazards (IPCC
2012)
Increasing exposures and vulnerabilities such as:
 Growing population, development patterns: Concentration of people and
assets in high risk regions, fast urbanization in coastlines
 Complex interdependencies of supply chains and trade patterns
 Cascading failure effects of infrastructure
 Inter-linkages of natural and man-made catastrophes
 Destruction of natural infrastructure (buffers)
Link for the report: https://www.genevaassociation.org/media/952146/20160908_ecoben20_final.pdf

11. 11
Promotinganintegrated&comprehensiveapproachtodisaster
andclimateriskmanagementandtheimportanceofinsurance
Sustainable Development
Climate Change
Disaster Risk
Reduction
1950 1970 1990 2005
SENDAI
FRAMEWORK
FOR DRR
PARIS
AGREEMENT
(COP21)
SUSTAINABLE
DEVELOPMENT
GOALS (SDGs)
(2015-2030)
Paradigm shift from a humanitarian to a development
issue: ex ante prevention and preparedness to
reduce risks; risk financing & transfer: multi-sectoral
A sequence of major disasters, governments
requested the UN for coordinated
humanitarian support
Climate change dialogue deeply
rooted in the science and
environmental communities.
Since 1960s major international climate research and monitoring programs
established)
UN brings sustainable development to the forefront of
international policy dialogue to focuse funding from
international donors, NGOs and philanthropic foundations.
A variety of initiatives between 1992 and
2012: UNEP-FI; UNDG, UN Global Impact;
UNEP-FI (PRI); UNEP-FI (PSI); WBCSD,
etc.
Negotiations focus
on mitigation.
UN stresses prevention and preventive measures
and establishes UNISDR.
A humanitarian issue engaging civil
protection agencies
Negotiations also
include adaptation;
1994:
Yokohama
2005: HFA (2005-2015)
1994: UNFCCC
1997: Kyoto
2010: Cancun
Adaptation
1994: UN Rio Summit 2000: MDGs
UN highlights linkages of development, population
growth, environmental degradation, ozone
depletion, health, clean water and energy.
SDG consultations engages
climate change and disaster
risk reduction issues.
1
2
3
3. Latest developments – Three UN Framework agreements have profoundly have impacted how
governments have responded to climate change and extreme events risk management!
Link for the GA report: https://www.genevaassociation.org/media/956576/stakeholder-landscape-in-eecr.pdf
2015

12. 12
1. Paradigm shift in national and sub-national planning, policy and regulatory
developments related to resilience and climate risk management (Adaptation
side)
BUILD CAPACITIES TO ASSESS AND
PRICE RISKS
RISK FINANCING & RISK TRANSFER
(insurance)
Enhance financial resilience of society
PREVENTION
Reduce risks through ex-ante preventative
measures and avoid creating new risks
EARLY WARNING & PREPAREDNESS
Improved capacity to manage emergencies
through warnings and emergency
preparedness
RESILIENCE THROUGH RECOVERY &
RECONSTRUCTION
Realise opportunities to recover quicker
and further reduce risks through recovery
and reconstruction planning and
implementation
Governments are central to building capacities in disaster and climate risk
management and adaptation. There is a slow paradigm shift towards a more
comprehensive risk-based approach.
The global insurance industry is actively engaging to support building resilience to
extreme events and climate risk.
Link for GA report: https://www.genevaassociation.org/media/952146/20160908_ecoben20_final.pdf
3. Latest Developments

13. 2. International Policy: COP21 Paris Climate Agreements (December 2015 –
UN Framework Convention on Climate Change – Came into force on 4 Nov 2016)
 An international diplomatic success – voluntary!
 Timelines and priorities of action related to mitigation of GHGs (i.e.
limiting the increase in average global temperature to 2 degree C)
 2020: nations obligated to undertake and maintain GHG emission
reduction plans (with updates every five years)
 2050: Target for net-zero emission target - countries are submitting
2050 de-carbonization plans
Q: Are these in consultation with sub-national governments and the private sector?
13
3. Latest Developments
Link to GA Repot: https://www.genevaassociation.org/media/942906/whatdoescop21meanforinsurance_complete_digital.pdf
Each country is responsible for national/sub-national sectoral (energy, transport, etc.)
and policy and regulatory directions (climate change mitigation/adaptation with
potentially risks of highly fragmented policies and reporting requirements (Intra- and
Inter-jurisdiction).

14. 3. National and sub-national policy, regulatory and reporting
developments related to low carbon economy (Mitigation) (some
examples)
 National budgeting and economic planning: e.g., Canada (2017 National
Budget and Pan-Canadian Framework for Clean Growth and Climate Change)
 Carbon pricing/trading mechanisms: e.g., Canada, Ireland, Australia, Chile,
Scandinavia, and Washington State
 Various reporting mechanisms at national and sub-national levels with
different origins: French Energy Transition law Article 173, Germany, Switzerland,
Netherland, EU level, UK, Australia, California
 Mandatory regulations impacting banks: Bangladesh, Brazil, China, EU,
Nigeria, Peru, Vietnam
 Variety of other initiatives at sub-national levels
14
3. Latest Developments
Source: GA research
Transitioning to a low carbon economy is starting to reflect in the national and sub-national
sectoral planning, climate policies (carbon pricing or taxing) and related regulatory and
reporting mechanisms. High risk of fragmentation (inter- and intra- jurisdictional)!

15. 4. Sustainability and social responsibility issue along with related
associated fragmented reporting methodologies (NGOs and IGOs)
 ESG and other methodologies
 OECD Investment Survey
 UN – UNEP FI Principles of Sustainable Insurance
 NGOs: Principle of Responsible Investing; Asset Owner Discloser Project,
CERES, Carbon Disclosure Project, 2 Degree C Investment Initiative, etc.
 All voluntary
15
3. Latest Developments
Source: GA research
Climate mitigation and transition risks for years have considered a sustainability and
social responsibility issue, by NGOs and IGOs, leading to fragmentation in the reporting
approaches, inconsistencies and reporting fatigue. But this discussion is now shifting to
an economic risk and core business issue (WEF 2016, FSB 2017).

16. 16
Strategy – the actual and potential impacts of climate-related risks
and opportunities on the organization’s businesses, strategy, and
financial planning
Risk Management – the processes used by the organization to
identify, assess, and manage climate-related risks
Metrics and Targets – the metrics and targets used to assess and
manage relevant climate-related risks and opportunities
Governance – the organization’s governance around climate-related
risks and opportunities
Governance
Strategy
Risk Management
Metrics
and
Targets
5. Financial - G20 Financial Stability Board‘s (FSB) – Task Force on
Climate-Related Financial Disclosures (FSB-TCFD) (Launched by Carney and
Bloomberg in 2015):
 Objectives: (i) Increased transparencies for assessing climate-related financial risks;
(ii) Development of standard climate risk reporting framework in the annual reports
(voluntary)
 Industry-led (Co-chaired by Bloomberg) - Two-phase process with extensive
consultations
Governance
3. Latest Developments
Source: Report II – FSB – TCFD : https://www.fsb-tcfd.org/publications/recommendations-report/ 16

17. 17
5. FSB-TCFD Continued:
 The four main recommendations are supported by specific disclosures for financial
filings to provide decision-useful information about their climate-related risks and
opportunities.
 A challenge in the need for standard approaches and methodologies to scenario
testing methodologies and expertise
 Supplemental guidance to highlight important sector-specific considerations and
specific reporting requirements in their annual reports have also been provided.
3. Latest Developments
Source: Report II – FSB – TCFD : https://www.fsb-tcfd.org/publications/recommendations-report/
This initiative points to a shift from a sustainability and corporate social
responsibility issue to a core business issue, with implications for the governance,
strategy, risk management and financial aspects.
While intended as a voluntary reporting, this could potentially replace the highly
fragmented approach to reporting and provide a more consistent framework for
companies to incorporate these risks into core business.
Scenario testing methodologies and expertise may pose challenges!

18. 6. Rating agencies (Standard and Poor’s, Moody’s and Bloomberg) are building
their climate risk research and assessment capacities:
 ~ Companies and Sovereign risk Credit ratings
7. Increasing shareholder awareness and changing sentiment towards carbon-
intensive industries
8. Increasing investor interest and alignment towards low-carbon investing
 Blackrock, Goldman Sachs, various investor coalitions are forming
 But many challenges for institutional investors with fiduciary responsibilities to shift their
investment portfolios
18
3. Latest Developments
Source: GA Research
The climate change discussion has shifted from “whether anthropogenic climate
change is real or not” to “determining pathways towards a low carbon economy
and institutionalizing climate risks into core business”!

19. Climate Adaptation and Resilience Agenda: Value chain of the insurance industry as
underwriter (GA Report 2016)
Share risk knowledge and risk pricing expertise
Share research and knowledge in preventative measures
Innovation in risk transfer products and services
 To build financial protection for governments, businesses, communities, individuals
(incentives to change behavior
 Regional facilities, parametric insurance, etc.
Faster and more efficient claims settlements
 Management and payouts
Support for development of sound risk transfer programs through close
cooperation with the government
 Multi-stakeholder cooperation and public-private partnerships
19
4. What does it mean for the Insurance industry?
Need for more coordinated and effective public-private partnerships, that leverage the
strengths of market-based insurance industry, avoid redundancies and align priorities.
Link for GA report: https://www.genevaassociation.org/media/952146/20160908_ecoben20_final.pdf

20. 4. What does it mean for the Insurance industry?
High-income countries
Also experience
Mid- and low-income coun-
tries also have additional
challenges• Fluctuating capacity
and Market appetite
Risk-pricing
difficulties
Public policy &
political motivation
Overall
challenges
Difficulties in risk assessment
due to lack of data
Asymmetrical information &
adverse selection
Limited take up
Moral hazard unless
insurance is incentivizing
risk-reducing behavior
• Lack of:
•
•
•
•
•
Data
Riks modelling tools
Technical expertise
Sclae
Developed domestic
finance sector
Scale
•
•
•
•
•
•
•
•
Regulatory constraints
Need for global (re)insurance
capacity and expertise
High distribution and claims
settlement costs
•
•
20
There remain a number of challenges and hurdles with expansion of risk
transfer solutions to address physical risks leading to large and in some cases
a growing insurance protection gap!
Link for GA report: https://www.genevaassociation.org/media/952146/20160908_ecoben20_final.pdf

21. 21
Global insurance industry is engaging in the dialogue with other key stakeholders to address
the insurance protection gap in extreme events and climate risk management.
4. SOCIO-ECONOMIC
GROUPINGS
5. INSURANCE
INDUSTRY AND ITS
AFFILIATES
1. GOVERNMENTS
2. UNITED NATIONS3. INTERNATIONAL
DEVELOPMENT COMMUNITY
7. SCIENTIFIC COMMUNITY,
ACADEMIA AND CENTRES OF
EXCELLENCE
6. NGOs, CIVIL
SOCIETIES, NON-
PROFITS
8. Regulatory Bodies
 National to local levels, various ministries and public-sector institutions
 Primary insurers, reinsurers,
brokers
 Cat Risk Modelling
 Think tanks and associations
Link for the GA report: https://www.genevaassociation.org/media/956576/stakeholder-landscape-in-eecr.pdf

22. 22
Highlights of major developments in disaster risk financing and risk transfer
over the last 2 decades.
FONDEN
Parametric concepts
being explored for various
applications
Turkish Catastrophe Insurance
Pool (TCIP)
Taiwan Residential Earthquake; India’s
weather index; MAIPARK
The Munich Climate Insurance Initiative (MCII)
established
CCRIF; India's large-scale weather indexed crop insurance;
PSNP in Ethiopia
ARC sells first policies drought risk; Kenya crop and livestock insurance; South East Europe and Caucasus
Catastrophe Risk Insurance Facility; PRISM
1996
1999
2000
2001 - 2003
2005
2007
2008
2009 - 2010
2011
2012 – 2013
2014
2015
WBG Cat DDO; Weather Derivative in Malawi; PCRAFI; RomanianCat Insurance
Scheme; OASIS
GIIF launched; Indonesia's flood microinsurance; Manizales, Colombia's Earthquake Property Insurance;
HARITApilot in Ethiopia; Kenya and Ethiopia: index-based livestock insurance.
Mexico's indemnity-based excess of loss insurance for public assets; Vietnam's agriculture insurance pilot; India's
Modified Area Yield Crop; MICRO established; Philippines' CLIMBS; ASEAN Roadmap DRFI
Sendai dialogue on DRR launched; G20 adopt DRFI; PCRIP; JICA; SECURE; weather derivatives with Uruguay; Political Champion
Group for Resilience insurance initiative established
Nicaragua joins CCRIF,Sendai Frameworkfor Disaster Risk Reduction (2015–2030); G7 InsuResilience; APEC finance ministers CAP for DRFI; 2030 Agenda for
Sustainable Development adopted; Climate Change Paris Agreementadopted; ARDIS
SINCE 2005,
GROWING
NUMBER OF
INITIATIVES
Link for the report: https://www.genevaassociation.org/media/956576/stakeholder-landscape-in-eecr.pdf

23. Investing in the transitioning to low carbon economy - Challenges and opportunities
for insurance industry as institutional investor:
Challenges – For example:
Fiduciary responsibilities: Drivers of investment strategies (ALM) and capital regimes
Political risks associated with fragmented (sub)national sectoral and climate policies, related
regulations and reporting requirements (governments’ de-carbonizatin strategies and plans)
Lack of sufficient green investment opportunities: that meet industry’s investment criteria and
requirements (Limited Cat Bonds and Project Financing)
Lack of reliable data and transparency: Analysis, methodologies, stress testing tools,
standardization of reporting requirements
Capital and regulators requirements: Need for adequate regulations that allow (provide
incentives) for longer-term investments associated with climate change
Opportunities -
Innovation in product development (Liability side): Could encourage behavioral change towards
low carbon and support resilience
23
4. What does it mean for the Insurance industry?
Source: GA Research underway
To address these issues the GA is conducting a study to identify and raise
awareness of key challenges, hurdles and opportunities for the insurance industry
on both asset and liability side of the business.

24. 24Source: GA
5. Geneva Associations’ Strategy and Policy Research
Four priority themes under two pillars (2016-2018 Work Plan):
Pillar 1: Transitioning to Low Carbon Economy
Theme 1: Role of insurance industry in transitioning to a low carbon economy?
(Forthcoming Nov. 2017) - Industry perspectives
 Based on interviews with CIOs, CROs and Chief Underwriter of the global insurance industry
Pillar 2: Resilience to Extreme Events and Climate Risk
Theme 2: How Can Risk Modelling shape the Future of Disaster and Climate Risk
Management? Innovation in Risk Transfer and Beyond
 How can innovation and experiences from industry be transferred to the public sector?
 Priorities for innovating risk modelling using latest scientific and technological developments (system’s
based)
Theme 3: Pathways to more effective PPPs
 Case study of Australia, UK, Germany, Canada, and Japan flood risk management
Theme 4: Insurance industry’s opportunities for investing and resilience of critical
infrastructure

25. 25
5. Geneva Associations’ Strategy and Policy Research - Resources
1) The Geneva Association issued its Climate Risk Statement, signed by 68 chief executive officers of the global
(re)insurance industry.
Link for the statement: https://www.genevaassociation.org/media/934317/geneva-association-commits-statement.pdf
2) COP 21 Paris Agreement: What Does it Mean for the (Re)insurance Sector?
Authors: Maryam Golnaraghi with contributions from: David Bresch, Peter Höppe, Karsten Löffler, Masaaki Nagamura, Ernst
Rauch
Link for the report: https://www.genevaassociation.org/media/942906/whatdoescop21meanforinsurance_complete_digital.pdf
3) An Integrated Approach to Managing Extreme Events and Climate Risks - Towards a Concerted Public-Private
Approach With recommendations to harness potential contributions of the insurance industry
Authors: Maryam Golnaraghi, Swenja Surminski, and Kai-Uwe Schanz
Link for the report: https://www.genevaassociation.org/media/952146/20160908_ecoben20_final.pdf
4) The “Global” Stakeholder Landscape in Extreme Events and Climate Risk Management - PPPs
Authors: Maryam Golnaraghi and Patrick Khalil
Link for the report: https://www.genevaassociation.org/media/956576/stakeholder-landscape-in-eecr.pdf
5) How Can Risk Modelling Shape the Future of Extreme Events and Climate Risk Management? Innovation in Risk
Transfer and Beyond (Forthcoming Sept 2017)
Engaging leading experts in risk modelling (from industry, risk modeling, science and technology and governments and
addressed two key issues:
(i) How can innovation in CAT risk modelling be transferred to the public sector to support risk-information resilience and adaptation
decision making
(ii) Priorities for innovating risk modelling using latest scientific and technological developments
6) Role of insurance industry in transitioning to a low carbon economy? (Forthcoming November 2017)
Industry perspectives from asset and liability sides of insurance business – (Based on interviews with CIOs, CROs and Chief
Underwriter of the global insurance industry)

26. (1) Four different types of climate-related risks could lead to financial and economic
impacts: Physical, liability, transition and reputational risks
(2) A number of policy, regulatory, financial and market-based developments are
pointing to:
 The transitioning to a low carbon economy but need for clarity on the national strategies,
pathways and approaches (Sectoral and climate policies, regulations, etc)
 The importance of integrating climate risks as an integral part of core business in all
sectors (spanning governance, strategy, financial, operational and risk management
practices)
(3) Role of Insurance industry as risk underwriters and institutional investors (with
fiduciary responsibility) BUT:
 A number of challenges linked to policy, regulatory, capital requirements and other
market-based issues, transparency, standardization, etc. need to be addressed
 Industry-level common vision and prioritization, multi-stakeholder engagement and
PPPs are critical!
(4) The Geneva Association through its strategic/policy research and influencing
activities is working with the global insurance industry to address these issues.
26Source: GA
6. Take-away Messages

27. www.genevaassociation.org
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For more information please contact:
Maryam Golnaraghi
Director of Extreme Events and Climate Risks Program
Maryam_golnaraghi@genevaassociation.org
Cell: +1 (604) 376.1886
www.genevaassociation.org