Climate Risk and Resilience
Insurance has a vital role to play in the future of our planet
Climate change, natural disasters, biodiversity loss, energy transition, poverty and inequality all need big ideas, superhuman efforts - and the investment capital to match.
Organisations all over the world are looking to adjust their businesses models. To find ways to be greener, fairer and more sustainable.
Insurance has an enormous role in this seismic shift: helping manage the risks, instilling confidence, building resilience and unlocking capital to support game-changing projects.
The race to respond to climate change is on. All businesses need to contribute, and Howden are contributing what we do best: outside the box thinking to create valuable risk transfer solutions.
Three examples of how we are tackling climate change
Enabling the transition towards a low carbon economy
Projects to support the transition to clean energy are expensive. There are often significant barriers to financing them.
We help remove financial roadblocks that many sustainable energy projects inevitably face. Smart use of credit insurance can play the same role as a well-respected early investor would: raising the level of confidence around the project and the security of the investment.
Transforming disaster relief funding models
Humanitarian organisations are facing a funding crisis. The UN reports that the disaster relief funding gap stands at over $30bn*.
We believe that insurance has a huge role to play in getting critical funding to humanitarian organisations when they need it most. Parametric insurance, built on pre-agreed triggers that result in pre-agreed payments, can provide the immediacy and reliability of funding needed to prevent a disaster from turning into a crisis, and reduce the overall financial and, more importantly, human cost.
Our Group CEO, David Howden spoke at the World Climate Summit during COP26 about how insurance is the key to unlocking the private capital needed to address the disaster relief shortfall.
Increasing confidence in carbon credits
Buying carbon credits is mandated for some industries, and optional for others (for now).
There can be a risk that the carbon credits being produced are not sequestering the correct amount of carbon dioxide, due to fraud or negligence by the project developers. Howden is the first broker to offer insurance protection against this in both the regulated market and the Voluntary Carbon Market. Read more here.
Working with the key players in driving change
- Humanitarian organisations
- Altruistic foundations
- Corporate and private charitable donors
- Renewable energy companies
- Power & Energy companies transitioning to greener sources
- Hedge funds, asset managers and private equity
- Brokers & other intermediaries
- Carbon finance businesses
New ways of thinking about financial risk transfer
Howden offers a range of ground-breaking opportunities for ESG projects.
But for us, they are not so new. These innovations are simply moving the dial by applying longstanding, tried-and-tested techniques of financial risk transfer to the most important challenges of our time.
We're taking the traditional techniques of financial risk transfer, and turning them into something new and highly valuable to ESG projects
*Figure correct as at October 2022
What we're doing
Our Climate Risk and Resilience team combines creativity, a passion for ESG, and deep experience of the inner workings of the insurance and financial markets.
Curbing global warming is a daunting task. To hit the 1.5°C target, entire industries will need rethinking. And wherever major change is happening, insurance has a big part to play.
Connecting sustainable energy projects with untapped investment capital
Green energy projects often struggle to raise sufficient investment capital to make a real go of it.
The backing of the insurance markets can change all that, as early investor returns can be guaranteed with the innovative use of credit insurance.
Howden is making that happen - we're currently working with green energy facilities in Europe.
Unlocking funds for disaster relief to increase the speed and impact of response
Many of the disasters that humanitarian organisations hold reserve funds for can be insured, using a blend of parametric payment triggers and the insurance industry's usual way of hedging major risks: catastrophe bonds. This allows humanitarian organisations to keep significantly less capital tied up in reserve and get funds into disaster zones faster.
The other great benefit is the financial multiplier effect: every £1 of funding translates into up to £20 of actual aid delivered.
Howden is the world’s first insurance broker to offer this. See our case study below, The Red Cross’ Volcano Bond.
Insuring carbon offsets to guarantee their value
Another world first, Howden enables organisations to insure their purchased carbon offsets against human error, negligence and fraud throughout the global supply chain. This could be on the part of an employee, the carbon project, the broker or the reselling intermediary.
If an audit reveals carbon offsets are suddenly downgraded or even worthless, our insurance products will fund rapid replacement, keeping you within any regulatory requirements and protecting your reputation from any media fallout. And most importantly, it ensures that the project you are backing is actually capable of absorbing your carbon production.
We are currently working with energy providers in the regulated US market, with a product for the voluntary carbon market coming soon.
How we helped the Red Cross with a disaster relief bond
Nearly 500 million people globally live near an active volcano. The Danish Red Cross uses a catastrophe bond, based on a parametric trigger mechanism, to release capital swiftly to mitigate a potential humanitarian disaster.
10 volcanoes are covered: in Mexico, Colombia, Ecuador, Chile, Guatemala, Indonesia and Cameroon.
The parametric claims trigger relates to volcanic ash and prevailing winds. When they reach pre-agreed parameters, indicating populous areas are under threat, funds are immediately paid to the Danish Red Cross, who can then move quickly to get the aid where it is needed.
Howden Group, with other industry partners, have pioneered this with the Red Cross, and our foundation provided funding to launch the first issue. We are developing more opportunities for the Red Cross and other humanitarian organisations, to help make their financial resources go further using leverage in the financial markets.
Climate in Peril Report
We're calling on the risk transfer industry to change insurance for (social) good. Our latest report analyses the science of climate change, the impact on loss frequency/severity, and the power of insurance in incentivising ‘better’ behaviours through an ESG lens.
Insuring Nature-based Solutions Report
Nature-based Solutions could provide up to 30% of the climate mitigation needed to limit global warming to 1.5°C. In this report, together with Be Zero Carbon and Blackford Group, we examine how insurance can accelerate the growth of a market that is vital to the future of our planet.
Meet the team
Head of Climate Risk and Resilience, Climate Risk and Resilience
Charlie brings over 25 years’ experience in the insurance market. Most of his career has been focused on financial institutions, designing risk transfer products across a wide range of disciplines. He is known for building new teams and capabilities with the aim of demonstrating how insurance can be used to help deal with the problems of tomorrow.
Head of Climate Analytics
Marc Lehmann is Head of Climate Analytics for Howden’s Climate Risk and Resilience team in London.
He joined Howden from Jupiter Intelligence where he was Head of Business Development & Partnerships for UK/Europe providing physical climate data and analytical services to a wide range of international clients. Prior to this he spent over 16 years in the insurance sector in several senior level roles including Head of Client Service Development at AIG and Global Head of Natural Catastrophe Risk Management services for corporate clients whilst at insurance broker Willis Towers Watson.
Marc has master’s degrees in engineering from the Swiss Federal Institute of Technology, Zurich (ETHZ) and Imperial College, London.
Prior to joining Howden, Stuart was an emerging markets fixed income investment specialist at J.P. Morgan, where he helped establish the firm's first emerging markets debt sustainable fund. Before that, he was a research analyst in J.P. Morgan's Climate Risk team. Stuart has an honours degree from the University of Bristol and is a former Royal Navy officer.
Account Executive, Climate Risk and Resilience, Climate Risk and Resilience
Victoria has worked for Howden for 5 years and been part of the Climate Risk and Resilience team since its inception. As well as supporting clients, she also contributes to product innovation projects, delivering product research and proposals. Victoria is well on the way to completing her Chartered Institute of Insurance qualifications, having already completed her Certificate in Insurance. Victoria also holds an honours degree from the University of East Anglia.
Account Executive, Climate Risk and Resilience, Climate Risk and Resilience
Tom joined Howden's graduate scheme in 2019, working in the reinsurance and financial lines teams. He did a six-month secondment to the Department for International Trade where he worked in their insurance and climate resilience team, helping to drive campaigns and engage with the insurance sector. Tom holds an honours degree from the University of Bristol and a master's degree from the London School of Economics.
Disaster Relief Executive , Climate Risk and Resilience
Caroline joined the Climate Risk and Resilience team in 2021 to help develop more sustainable models for funding humanitarian response to natural disasters.
Prior to joining Howden, Caroline spent 20 years planning and delivering humanitarian aid operations in complex emergencies worldwide, supporting those affected by conflict and natural disasters across Asia, Africa and Europe.
Executive Director, Environmental & Climate Risks
Glenn has over 10 years experience in the environmental liability insurance market, most recently developing and leading the environmental team within Howden's M&A practice. Prior to joining Howden, he led the environmental liability team within a global insurer, after a career working on remote mining and construction projects across Australia as an environmental engineer. Glenn holds an honours degree in Environmental Engineering and a Masters of Business Administration. Within the Climate Risk and Resilience Team, Glenn focus on developing risk transaction products in to support clients through the energy transition and with acquisitions made in the carbon markets.