Munich Re’s Jeworrek: What COVID-19 and climate change have in common

The insurance industry can do more to mitigate the onset and effects of climate change, according to Torsten Jeworrek, Member of the Board of Management of Munich Re and Chairman of the Reinsurance Committee. 

Writing in Reactions' CEO Risk Forum 2020, Munich Re's Torsten Jeworrek says the insurance industry can simultaneously be an enabler of new sustainable technologies and withdraw from from investments in traditional energy.

“Insurance has already proven this by pioneering insurance solutions for photovoltaics, wind power and others: getting providers’ and investors’ risks from new technologies off their balance sheets and thus making market entry possible," he says. 

“Munich Re’s latest step in this direction is our support for the hydrogen initiative in the European Union. We have to have the ambition to drive similar projects and bring more solutions to the market at affordable prices. This engagement is also needed on the asset side, where we have taken initial steps ? though more have to follow,” he adds. 

The other side of the coin is also to incrementally withdraw from investments in traditional energy at the same time, Jeworrek writes. 

“We now need to finally and consistently address the challenge of climate change, so that it does not remain a risk that we simply did not want to believe. The world needs to take vigorous action now to reduce greenhouse gas emissions in order to prevent losses and ensure we are not taken unawares by the consequences of climate change, as we were with the current coronavirus pandemic,” he said.

“Let us be honest: all of these structural economic changes will have their price - but avoiding them would be even more expensive for the world community.”

Jeworrek compares the climate emergency to the COVID-19 crisis, saying they have at least two things in common. “First, all the experts knew they were coming and that their impact would be extreme. And second, we still did little or nothing about them. Despite all our knowledge and scenario analyses, the coronavirus caught the world more or less unaware.

“The coronavirus pandemic remains a global challenge and we as a society have to admit that we were not sufficiently prepared for it. Worse still, we could have been because the know-how was already there. We should not make the same mistake with another risk that has systemic elements: climate change.”

Check out Reactions' CEO Risk Forum 2020 in our September issue, here