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 is 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
  • Banks
  • 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. 

Marine hydropower turbine

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.

Volcano

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.

Amazon rainforest

Insuring carbon credits to guarantee their value

Another world first, Howden enables organisations to insure purchased carbon credits against human error, negligence and fraud by the project developer.

If the purchased carbon credits are suddenly downgraded or found to be worthless, our insurance products will fund rapid replacement, maintaining your offsetting progress and demonstrating to your stakeholders that you are taking appropriate steps to mitigate this risk. Most importantly, it ensures that the project you are backing is actually capable of absorbing your carbon production. We are working with intermediaries and businesses investing in the voluntary carbon market.

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. We are developing more opportunities in partnership with humanitarian organisations, to help make their financial resources go further using leverage in the financial markets.

Climate in peril report

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

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

Photo of Rowan Douglas

Rowan

Rowan Douglas

CEO, Climate Risk & Resilience
Photo of Charlie Langdale

Charlie

Charlie Langdale

Chair of Climate Risk and Resilience
Photo of Isabelle Cadignan

Isabelle

Isabelle Cadignan

Chief Commercial Officer, Climate Risk & Resilience
Photo of Victoria Waite

Victoria

Victoria Waite

Head of Strategic Initiatives and People, Climate Risk & Resilience

Ready when you are

Do you have an existing policy with Howden?

Got a question or query? Give us a few details in the box below and we'll get back to you. 

Our Website Terms and Conditions and Privacy Notice includes information on the scope of our service and how we will handle your data.

CAPTCHA
16 + 4 =
Solve this simple math problem and enter the result. E.g. for 1+3, enter 4.
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.

What to do if you are experiencing financial difficulties

We recognise that the current economic conditions are putting pressure on many households and businesses. At Howden, we are committed to finding ways to assist our customers who may require additional support during these times.

If you’re currently facing financial difficulty, please speak to us about your insurance policies by:-

-contacting your Howden Service Team; 
-calling Howden on 020 7623 3806;
-using the Enquiry form.