Half of Insurance Council of Australia members are targeting net zero operations by 2030, and almost two-thirds have linked executive pay rates to climate metrics.

ICA’s third climate change road map, which outlines commitments to greenhouse gas reduction, shows 85% of the peak body’s more than 50 members have set targets for net zero emissions by 2050 and 80% are implementing programs such as improving energy efficiency and sourcing renewable energy.

For example, RACQ has installed 29,455 solar panels across commercial and residential projects, provides green loans to members for sustainable home improvements and to finance electric cars, and is transitioning its roadside fleet to low-emission vehicles.

ICA CEO Andrew Hall says the insurance industry is the financial “shock absorber” for extreme weather events that cost homeowners about $4 billion a year.

Worsening bushfires, cyclones and floods highlight the need for more action to “future-proof Australia’s resilience”, he says.

“Our members are stepping up to the plate by preparing for climate disclosures and taking action now to reduce emissions,” he said. “Each update we make to this important road map will help ensure it reflects current best practice and industry progress.  

“Insurers have continued to take strides in implementing its best practice recommendations, working to contribute to the transition to a low-carbon economy.”  

Almost one-third of ICA members are introducing strategies to reduce high-carbon purchases, and most are developing emissions baselines to track their operations.  

Steps have also been taken to prepare for climate disclosure requirements, which will apply to most major Australian businesses from early next year. More than half of ICA members have already made disclosures to meet offshore rules.  

ICA initiatives this year included an industry roundtable on land use, best practice guides on emissions target setting and leading a delegation to the US to examine policy responses.  

Mr Hall says that despite Australia experiencing less severe weather this year than in recent years, there were almost 157,000 claims and $2.2 billion of insured losses in the year to June, and “we cannot afford complacency”.  

“Across the globe, devastating bushfires, floods and heatwaves continue to underscore the urgency of climate action. As extreme weather intensifies and populations grow in high-risk areas, the global insurance protection gap continues to widen. We must prioritise action given our exposure to a large number of climate risks.

“It has never been more critical for insurers to remain at the forefront of Australia’s response to climate change, driving down emissions and uplifting the resilience of our communities and business.”

Last year, the ICA road map won a sustainability prize at the Asia Insurance Industry Awards.

From Insurance News magazine: We analyse the federal flood inquiry's final report, and examine what it means for Australia's future resilience