{"id":21972,"date":"2017-11-14T22:16:03","date_gmt":"2017-11-15T03:16:03","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/axa\/"},"modified":"2017-11-14T22:16:03","modified_gmt":"2017-11-15T03:16:03","slug":"axa-redefining-standards-strategy-leading-insurance-industry-to-face-climate-change","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/axa-redefining-standards-strategy-leading-insurance-industry-to-face-climate-change\/","title":{"rendered":"AXA \u201cRedefining Standards\u201d Strategy: Leading Insurance Industry to Face Climate Change"},"content":{"rendered":"

The insurance industry shows growing concerns in the face of Climate Change future challenges. Insurance companies are the main businesses impacted by the three financial risks associated with Climate Change: Physical risk, Transition risk, and Liability risk [1]. The Physical risk<\/strong> is observed through the increase in climate-related damages such as storms, floods or even tsunamis that have dramatically increased insured losses since 1980 (Figure 1<\/strong>) [2]. In particular, in 2017 alone in the US, Hurricanes Harvey, Irma and Maria caused nearly $300 billions in losses and damages, more than twice the amount of all damages caused by hurricanes in the last 10 years [3]. The Transition risk <\/strong>to a low-carbon economy directly impacts insurance companies which hold large investments in coal, oil, and gas companies. The Liability risk <\/strong>comes from the fact that some people or institutions that have suffered from climate damages will try to hold accountable other people and organizations that will see these losses covered by insurers.<\/p>\n

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Figure 1<\/strong> \u2013 Worldwide natural disasters 1980-2011<\/span><\/p>\n<\/div>\n<\/div>\n<\/div>\n

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Moreover, populations face greater concerns of both climate change reality and the limited ability of governments to address it, and increasingly seek initiatives to collectively address the problem, up until their daily lives, including the type of insurance purchased promoted by 87% (Figure 2<\/strong>) [4]. Therefore, climate change represents both a challenge and an opportunity for insurance companies.<\/p>\n

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Figure 2<\/strong> \u2013 Personal situation regarding possible consequences of climate risks<\/span><\/p>\n<\/div>\n<\/div>\n<\/div>\n

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2012 Survey among 13,000 people across 13 countries led by AXA in partnership with the research institute IPSOS<\/p>\n

Going forward: between Commitment and Research<\/strong><\/p>\n<\/div>\n<\/div>\n<\/div>\n

Insurance companies face a double activity. One is to offer insurances services and advice to clients, another is to invest the funds they receive for greater returns. Both are correlated and impact AXA\u2019s strategy to cope with climate change.<\/p>\n

AXA undertook a series of short-term commitments<\/strong> to address this new reality:<\/p>\n