A University of Cambridge report has set out the role of insurers in the global effort to accelerate climate resilience as the United Nations COP26 summit enters the final stretch this week in Glasgow.

The “Risk Sharing in the Climate Emergency: regulation for a resilient, net-zero, just transition” includes as co-authors Geoff Summerhayes – former Australian Prudential Regulation Authority executive board member – and law firm Clyde & Co Senior Equity Partner Nigel Brook.

The report makes 20 recommendations, saying the world can draw on the insurance industry’s risk expertise to address the climate peril.

One of the proposals touches on climate stewardship in relation to carbon underwriting budgets while another focuses on insuring the green economy.

The report says the scope and scale of climate transition may even require insurance solutions to be developed before risks manifest to avoid detrimental impacts and delays.

“A new global, resilient, low carbon economy will be enabled by unprecedented and accelerated technological innovation,” the report said.

“This will, in turn, create new insurance products and classes, just as insurance systems and related governance have supported the development and adoption of new technologies and high-risk industries, such as steam boilers, mass electrification, motor vehicle and air transportation.”

Mr Brook says the paper puts insurance into the broader context of risk-sharing, looking at how the right response from policymakers could do more to achieve a timely, global transition to net zero, in a way that is fair to all and embeds resilience.

Getting to net zero by 2050 will require, among other things, substantial improvements in energy efficiency, massively increased use of renewables, scaling of green fuels, carbon capture, use and storage for the remaining use of fossil fuels.

“None of these momentous changes can be fully accomplished in a few years,” Mr Brook told insuranceNEWS.com.au.

“As announced at COP26, investors with over $US130 trillion ($175 trillion) of assets under management have signed up to [Glasgow Financial Alliance for Net Zero], committing to science-based commitments to net zero.

“They are pressing energy companies in their portfolios to reduce their production and sale of fossil fuels year on year and pivot to renewables, and ultimately divesting from companies that are not aligned with their goals.

“Insurers have a similar role to play in stewarding fossil fuel companies down the path to net zero.”

Click here for the report.

See ANALYSIS.