London’s underwriters say the threat to the climate is still the biggest emerging risk they face in the year ahead.
As the COVID pandemic continues a survey of its members by the International Underwriting Association (IUA) climate risk was identified as the top challenge currently facing the London market.
The organisation recorded 27% of respondents mentioning climate change and wider environmental, social and governance (ESG) issues when asked what are the top three challenges facing your company? The second most popular answer was regulatory change (mentioned by 22%) and third was challenges raised by the COVID-19 pandemic, particularly a shift to remote working (17%).
Climate risk also came out on top when IUA members were asked what are the most important emerging risks for insurance coverage? Here it accounted for 45% of all answers, compared to a total of just 7% when the same question was asked in a similar member survey four years ago.
IUA Chief Executive Dave Matcham said: “Over the past couple of years we have seen climate risk emerge as a dominant topic across many of the London Market forums run by the IUA. Companies are focused both on providing cover for more extreme weather events and helping clients manage transition risk as the global economy moves to a more sustainable operating model. There is also a great deal of work being done in response to new climate risk regulations and to consider the environmental impact of firms’ own business operations.
“It is interesting to see how priorities have changed since our last member survey in 2017. Back then the biggest challenge facing companies was the soft market and general pricing, followed by Brexit. There are, however, some perennial concerns – particularly regulation and a growing compliance burden.”
The IUA member survey was made up of responses from individuals across 44 different London Market companies. The poll also illustrated that IUA model clauses are well used in the market with 98% of respondents stating they are employed by their company.
Elsewhere, data standards were identified as the most important issue for the digital transformation of London Market central services, followed by claims processing in second place. Also important were electronic placing, accounting and settlement and driving adoption of market solutions.
Matcham added: “Our survey results show that approval for the IUA’s activities is very high and has grown significantly in recent years. Members feel that the association has an important role to play, both in supporting their own personal business role and the interests of their firm more generally. I would like to thank all of our member companies for their continued backing.”