Insurers have the expertise to aid an ambitious United Nations climate action plan, according to industry think tank the Geneva Association.

In the pact agreed by 195 countries in Paris last December, insurance is referenced directly in some sections.

The industry is seen as key to supporting communities’ efforts to adapt to and manage losses from climate change-related events. Insurance-linked solutions such as early warning systems, risk insurance facilities, emergency preparedness and comprehensive risk assessment can aid mitigation plans.

“The Paris agreement offers both opportunities and challenges for the insurance industry, especially in the areas of risk transfer for extreme events, sustainable energy and public sector risk financing,” the Geneva Association says.

“The insurance industry has the potential to contribute significantly to making societies more resilient with respect to… climate change and, at the same time, creating new business.

“Furthermore, with the inevitable path towards the net-zero-emission target, the industry has the opportunity to engage proactively with other key stakeholders to find the best investment strategies.”

It is a “unique chance” the industry should embrace, the association says.

“It seems inevitable the (re)insurance sector will not only be providing a wider range of risk transfer solutions, but will also be supporting emission reduction efforts and the transition to a low-carbon economy through its investment strategies, as well as actively managing its own carbon footprint.”

The US and six other G7 economies have pledged $US420 million ($585 million) to increase the availability of risk transfer and insurance solutions to an additional 400 million people in countries most vulnerable to climate change.

The Paris agreement is the first climate deal since the Kyoto treaty, and is binding under international law. It will take effect by 2020 upon ratification by at least 55 countries, including the US and China, which are among the worst carbon polluters.