GVNW urges insurers to focus on coverage for green transition

The German risk and insurance management association (GVNW) would like to see insurers focus on delivering new coverages for innovations designed to reduce carbon emissions, such as green concrete, rather than only penalising firms for their supposed failings.

Patrick Fiedler, president of the association, made the call during his opening presentation at this year’s GVNW Symposium in Munich. He also said that the association is stepping up its efforts to try to thrash out common approaches and standards on ESG information requested by insurers, in what is becoming an often complicated, time-consuming and inconsistent process.

“Based on our second member survey published earlier this year, GVNW members expect ESG to become increasingly relevant. But for now this means more questions and, in extreme cases, the refusal of cover,” said Fiedler.

“We have said that we would like to see a more fact-orientated exchange on ESG. As Herbert Fromme said in his recent article in Versicherungsmonitor, the insurers are not the environmental police! We want a more positive discussion,” added the GVNW chairman in his first time in charge of the Symposium.

As Fiedler noted, so far P&C insurers have mainly focused efforts on reducing emissions associated with their own business operations (Scopes 1 and 2) and decarbonising their investment portfolios (Scope 3 financed emissions).

“Rather than setting such targets, perhaps it would be better to focus on providing insurance for projects that support the transition to net zero such as green concrete and hydrocarbons, focusing on how much is saved by insuring transformation projects – a positive approach,” explained Fiedler.

The GVNW created its own working group on ESG this summer, mainly to try to create some common standards for the whole market to use and deliver a more coherent, consistent and transparent process.

Fielder said that, over time, risk and insurance managers will begin to ask questions about the ESG performance of their carriers. But again, he does not want to see this process being taken too far. “There is an increased need for transparency; this will not stop, but we [GVNW members] are not the environmental police,” he said.

There are inevitably fears that the rise of ESG will lead to a host of new claims brought against corporations and their directors and officers for failing to meet new regulatory requirements and for greenwashing.

Fiedler said he understands these concerns but questioned to what extent they will materialise based on historical experience in related areas.

“There are potentially significant exposures in liability lines and D&O in particular – claims brought for violation of ESG related rules, for example. This is, however, potentially similar to the 1990s when product liability rules were extended and the insurers predicted waves of claims that actually never came,” he said.