Amrae puts insurance sector on trial for crimes against insurability

Are insurers guilty for the uninsurabilty of risks linked to climate change? French risk managers believe that is indeed the case. Underwriters deny the charges. The debate has been raging in the market for a while, with all sides offering strong arguments to support each case. To try to settle the debate, French risk management association Amrae held a mock trial accusing the insurance industry of crimes against climate change uninsurability. The trial, which took place in the second day of the annual risk management conference organised by Amrae in Deauville, was presided by Michel Josset, a vice-president of the association and director of insurance and prevention at Forvia, the automotive group. That raised some doubts about the impartiality of the court. Not least because the prosecutor was another risk manager, Franck Grimonpont, the director of insurance at utility Suez Environnement. Sitting in the defendant chair was Patrick Degiovanni, the chairman of insurance group CNPP, representing his industry. He was supported by Héloïse Barbat, the head of strategy of sustainability at AXA Climate, who played the role of defense attorney. The audience was called on to make up the jury. From the beginning it was clear that the defendant would need all the support he could muster from his attorney. Degiovanni tried to defend the charges by declaring the insurance sector “not guilty” of crimes of uninsurability. The prosecutor was not having that. “The defendant [the insurance industry] is a seller of promises,” Grimonpont said. “They hide behind the fact that they speak a language that nobody understands.” The accused presented a broad view argument about the rapid acceleration of climate change and the increasing frequency and severity of secondary peril losses, as well as contraints from the reinsurance market, to justify the insurance industry’s caution when writing risks linked to climate change. The defense attorney provided numbers to strengthen the case. Barbat pointed out that global temperatures rose by historically high levels in 2024, having already broken records in 2023. The result was many more extremely hot days, with dire consequences for climate events. Barbat noted that Munich Re, “who deserves all our confidence”, estimated that nat cat losses went up by 20% last year to reach $320bn. The prosecutor was unimpressed. “The GIEC has been talking about the consequences of climate warnings for 30 years. Why hasn’t the industry done anything about it?,” he asked the jurors. “Those are crocodile tears.” As tensions rose, the defense called to the pulpit a representative from the reinsurance market to validate its claims. Frederic Dhers, CEO of Scor Europe, explained why reinsurers have been forced to put pressure on primary insurers by limiting their access to capacity and demanding higher retention levels due to an explosion of claims. He listed not only climate events, but other factors such as a rise in political violence losses and nuclear jury verdicts in the US as driving loss aggregation that trickled down to the insurance market, which was forced to limit its exposures. “So the defendants do not do anything other than replicate what the [reinsurance market] does? That is an organised criminal gang,” replied the prosecutor, who was not buying the underwriters’ argument a bit. When the judge called for the final arguments, Degiovanni made a passionate defense of the role played by the insurance industry in finding solutions for conundrums such as terrorism risks and other tricky topics. “We created GAREAT [the French terrorism pool] in three months,” he said. Barbat went as far as citing rivals such as Zurich and FM as companies that, as much as AXA, are working hard to develop climate resilience solutions for clients. “The defense attorney forgot to mention that CNPP is also working on it,” added the defendant, showing that, even against a clearly unfriendly court, he had not lost his commercial acumen. The prosecutor was as uncompromising as ever. He accused the insurance industry of investing too much effort in conversation and not enough in being creative. “It’s always the same blah-blah-blah,” he said. The judge decided then that it was time to make a decision. He invited the audience to act as jurors and vote on a digital tool about the culpability of the insurance industry. “Vote according to your convictions,” Josset said. “Don’t let the latest renewals influence your vote.” The jurors absolved the insurance industry from one out of three charges: Of having organised the uninsurability of climate risks. But insurers were overwhelmingly condemned for not doing enough in terms of offering prevention advice to clients and for not innovating enough. The punishment imposed by the judge was “to perennially help their clients to face climate change”.

Amrae puts insurance sector on trial for crimes against insurability

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