Press Releases

Korean and global insurance experts agree: insurers must step up on climate risk

Korean and global insurance experts agree: insurers must step up on climate risk

Forum on "Korea's Insurance Industry and Climate Action: A Focus on Climate Risk Management" held on the 8th

Rep. Yongwoo Lee: "Losses are mounting for insurers as disasters increase — ESG assessment criteria are needed"

Swiss Re, the world's second-largest reinsurer, and UN body UNEP FI: "Insurers must aim for net zero"

The office of Rep. Yongwoo Lee, the Korea Insurance Research Institute (KIRI), the Korea Sustainability Investing Forum and Solutions for Our Climate held a forum titled "Korea's Insurance Industry and Climate Action: A Focus on Climate Risk Management" in the Small Conference Room of the National Assembly Library on the 8th.

With carbon neutrality emerging as a defining challenge of our time, growing emphasis is being placed on the role of the insurance industry, which finances fossil fuels through underwriting and also invests directly in companies. The forum was convened to discuss how insurers should respond to climate risk and to define the industry's role as an investor in an era of climate crisis.

Insurers are already feeling the impact of the climate crisis, with claims payouts surging as wildfires, floods and other climate-driven disasters become more frequent. Overseas, a growing number of insurers, including large ones, have been unable to keep up with mounting claims, with some halting new policies and others filing for bankruptcy.

In his opening address, Rep. Yongwoo Lee (Democratic Party of Korea) set out the purpose of the forum: "As natural disasters grow more frequent, insurers face mounting losses from claims, and they also suffer losses when the companies they invest in fail to meet global carbon regulation standards." He added: "The industry must keep pace with global trends by reflecting climate risk in its strategy and putting in place concrete climate risk management and ESG assessment criteria for the insurance sector. I hope today's forum will produce concrete ideas on how the insurance industry should respond to the climate crisis and what measures it should take."

The forum opened with a presentation by Siew Sze Lee, a senior executive at Swiss Re, the world's second-largest reinsurer, on "Climate change risk management practices at global insurers." He was followed by Remco Fischer of the United Nations Environment Programme Finance Initiative (UNEP FI), a UN body, on "The essentials of a net zero insurance strategy," and finally by Seungjun Lee, Head of the ESG Center at the Korea Insurance Research Institute, on "The state of climate risk management in Korea's insurance industry: assessment and future tasks."

Siew Sze Lee of Swiss Re said: "Swiss Re's sustainability strategy focuses on two goals — advancing the transition to net zero and building societal resilience. To that end, since 2009 we have used an ESG framework to identify, assess and address the potential risks associated with transactions." Siew Sze Lee added: "Swiss Re took its first step toward developing a carbon risk adjustment mechanism for underwriting back in 2018, when it introduced its thermal coal policy."

"The insurance industry must strengthen its climate risk analysis and align its investment portfolios with the 1.5°C goal of the Paris Agreement," said Remco Fischer of UNEP FI. "Only when underwriting and investment portfolios move toward the 1.5°C goal can they contribute to net zero." He added: "As a direct investor, the insurance industry's choices and actions will shape both the present and the future."

Seungjun Lee, Head of the ESG Center, said: "The insurance industry is in no way immune to the shifts in asset values, and the attendant risks, that come with countries' policy transitions on climate change, so it must develop and manage its response pre-emptively." He also noted: "Awareness of climate risk currently varies widely from company to company. Companies are drawing up climate strategies, but the problem is that those strategies are not being put into practice."

Referring to the mandatory sustainability disclosure rules — covering companies' environmental and social responsibility activities — that will apply to KOSPI-listed companies with assets of KRW 2 trillion (approx. USD 1.5 billion) or more from 2025 and be extended to all KOSPI-listed companies from 2030, Lee added: "We need swift and effective policy on the sustainability disclosure regime."

The presentations were followed by an open panel discussion. Panelists included Eunhyang Kim, Deputy Director of the Fair Markets Division at the Financial Services Commission; Prof. Junhee Chung of Daegu University, who serves on the insurance subcommittee of the Korean Accounting Association; Hyunju Ryu, Team Leader at BNZ Partners; and Suyeon Han, Researcher at Solutions for Our Climate.

Panelist Suyeon Han, Researcher at Solutions for Our Climate, said: "Natural disasters driven by the climate crisis, and the economic losses they cause, are already rising sharply." She added: "More proactive climate risk management is unavoidable, both for insurers' finances and for the supply of insurance. In particular, it is essential to establish concrete policies to reduce the insurance industry's dependence on fossil fuels."
 

Contact: finance@kosif.org