Economist urges Dutch insurers to step up on climate change

A leading economist in the Netherlands has called on insurers to “raise their hands” in the fight against climate change. The call came from Pieter Hasekamp, director of the CPB Bureau for Economic Policy Analysis – the government’s economic planning agency – who was addressing the Dutch Insurance Association (VVN) at its annual claims conference. In an interview with the association ahead of the event, Hasekamp, also former CEO of the Netherlands’ Association of Health Care Insurers, said that he can't predict the future but there are clear trends in losses, not least driven by climate change, and both politicians and insurers need to “take action and make choices”. “Raise your hand more often,” Hasekamp advised the Dutch insurance market, telling insurers they need to be more proactive in critical areas such as flood risk. “Insurers are conservative by nature. They don't raise their hands easily. After all, you shouldn't ask for too much attention, because then you could end up with bad publicity. Take the flood risk. I'm no expert, but can't insurers do more in that area? How do they get everyone to take out insurance? One of the problems with the flood in Limburg was that the risk was insurable but not always insured,” he said, as southern Germany was coping with another serious flood event. According to Hasekamp, insurers need to assert their role more. “It is a political and social trend that the government is increasingly becoming a compensatory government. It helps in all kinds of areas to compensate people who experience damage… insurers in particular understand this and can play a role in dealing with uncertainties. Perhaps they have looked too much at the government over the past 20 years, while private solutions were possible.” Haskekmap stressed the need for nations and business to focus on risks more sharply, prepare contingency plans and spread risk more effectively in reference to the Ukraine Russia war and how it has revealed a concerning dependance on Russian gas. “The example of Russia shows there are geopolitical risks with which countries use the economy to exercise their power. Sometimes this is simply trading for political purposes, as the Russians do, but the risk spreading goes further than that. We will always be (partly) dependent on foreign countries, but just as we do not only have to get the gas from Russia, we must also ensure that not all chips, solar panels or raw materials come from certain countries,” he added. For Hasekamp, the key is to try to become more productive. For example, by making more use of technology and making important choices, particularly with the energy transition. And insurers certainly have a role to play in the transition by using their unique data. But they have to achieve the right balance in this effort. “I think they [insurers] could show more courage in the field of climate and climate adaptation. Due to the availability of a lot of data, we know more and more about people's behavior. This allows you to predict individual risks increasingly better,” said Hasekamp. “Data is needed to implement more prevention, but insurers must not go too far in the selection process, which could turn out to be unfair. If everyone pays the premium exactly in accordance with their own risk, this will be at the expense of solidarity. Developments such as AI and Big Data therefore offer great opportunities for insurers, but they must be and remain aware of the dangers. The right balance is again very important here,” he added. As German politicians and the insurance sector once again engage in a heated debate about compulsory natural catastrophe insurance and the need for public private partnerships (PPPs) to cope with systemic risks, Hasekamp clearly thinks partnership is the way ahead. “That concept (PPPs) has indeed worked well in healthcare. A health insurer cannot function without the government. A private solution with public preconditions could also work well in the event of flooding, because do not forget that the risks of flooding also change over time. I don't think Frisians would have thought of flooding as a major risk for their province until recently, but recently quite a few cellars and streets flooded after a rain shower. The mechanism of compulsory insurance in a public-private partnership could be a solution,” he said. Again, Hasekamp stressed that insurers need to be proactive and take part in the debate. “Take action and make choices… insurers know that sustainability is here to stay for the time being… insurers don't want to be too visible, but at the same time they are essential for the proper functioning of society. Without insurance, everything comes to a standstill. And of course you can't do everything yourself, but raising your hand a little more often is fine,” he concluded.

Economist urges Dutch insurers to step up on climate change

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