Climate focus pushes Singapore insurers to reshape business models

WITH the recent 2021 United Nations Climate Change Conference (COP26) in Glasgow sparking renewed discussions on the insurance industry's role in reducing emissions, Singapore insurers are also planning ahead on how to intensify their focus in this area by embedding zero-carbon targets and managing climate risks in their business and operating models.

On one hand, insurers are motivated by the opportunities of introducing new products and services associated with the emerging green economy. On the other hand, they remain concerned that physical risks from climate change and transition risks from the shift to a low-carbon economy could be so significant that it would impact the type of policies that they can offer consumers and the investments they can make.

How these considerations pan out will impact the level of coverage that consumers and companies will stand to benefit from - when it comes to climate risks - as well as how much these end-users will need to pay. Like many other sectors globally, insurers are also growing their understanding of integrating environmental, social and governance (ESG) aspects holistically as part of business.