News7 November 2019
Climate adaptation entails dizzying costs. Integrated solutions with a cross-sectoral approach are the only answer to water challenges connected to climate change. The financial sector is indispensable in this approach. The Swiss Re Group, one of the world's leading providers of direct insurance and reinsurance, recently joined the Netherlands Water Partnership. Jeroen Weurding and Gerth-Jan Heck emphasise that Swiss Re takes its responsibilities seriously and wants to share its expertise.
"We often deal with natural disasters. These always come with a substantial price tag which we have to pay. Climate change is putting enormous, exponentially increasing, price pressure on society. We see this in our statistics. It has a very strong impact on the nature, severity, and frequency of natural disasters.
Hurricanes Harvey, Irma and Maria in the Caribbean caused USD 110 billion damage and we were the largest payer. At the Global Entrepreneurship Summit 2019 in The Hague in June of this year, I talked about the rising costs of fires caused by drought. From 1990 to 2000, the claims burden was USD 0.5 billion, the next decade USD 5 billion and between 2010 and 2018 it had jumped to USD 50 billion. So a factor of 10 per decade. Another example is that the low groundwater levels caused by the drought in recent years have caused hundreds of millions of dollars worth of damage in the logistics sector in Germany. Lower water levels led to less heavily loaded ships and more road transport. We use our data and our analyses to warn governments, companies, society about what is happening. Our day-to-day work is to estimate, spread and mitigate risks. Our motto is ‘Make the world more resilient’, and for good reason.
Climate adaptation in the water sector also offers enormous economic opportunities because of the huge need to invest in areas such as coastal protection, river basin protection, and ensuring sufficient and safe drinking water.
We insure many large waterworks, such as the renovation of the iconic Afsluitdijk. Large projects are giving increasing attention to sustainability, for example by opting for nature-based solutions. Consider the conservation and renewal of mangrove forests that function perfectly as breakwaters for islands and coastal areas. We are also committed to protecting coral reefs off the coast of Mexico. As coral reefs reduce wave size, this is both nature and coastal protection at the same time.
New, more sustainable solutions can be more expensive, so clients need to be convinced to go along with them. Sustainable approaches need to be investable. We play our part in this. Financiers and investors do not come on board if a project cannot be insured. An example is a drinking water network that a major Dutch company is installing in Sri Lanka. Another example is that if a mangrove forest needs to be cut down for a project, we demand the guarantee of replanting in the same region. Or, even better, we prefer solutions without any cutting of mangroves. This strategy helps: if the entire market would start to think and work in this way, significant steps could be taken towards more sustainability. A growing number of important contractors are acknowledging their responsibilities. We are also an investor ourselves: we have an invested capital of around EUR 150 billion and we also make sustainable choices. You must put your money where your mouth is.
A cross-sectoral approach is essential for offering integrated water-related solutions. That is a clear message from the Dutch water sector and the Netherlands Water Partnership encourages this approach. We joined NWP because we seek dialogue to better understand the water sector and subsequently to be of better service. And it is a two-way street: we are a relevant partner, we bring our expertise, our statistical data and our analyses, and we think we can offer added value."
The Swiss Re Group is one of the world's leading providers of reinsurance, insurance and other forms of insurance-based risk transfer and is working to make the world more resilient. The goal of the Swiss Re Group is to enable society to thrive and progress, creating new opportunities and solutions for its clients.