LUDOVIC SUBRAN | Chief Economist, Allianz SE
ARNE HOLZHAUSEN | Head of Economic Research’s Insurance, Wealth, and ESG team, Allianz SE

Climate change has a very simple effect: risk is rising in the world. This poses an existential challenge for the business model of insurance, the transfer of risk. 

Impact underwriting and impact investing describe the new mindset: the industry no longer only prices and transfers risk but tries to change outcomes from non-sustainable to sustainable ones. For that, public-private partnerships are essential, both on the strategic level, steering the transition with long-term policy guidance, and on the operational level, building adequate risk-protection schemes and supporting investment. 

But climate change is not the only challenge that threatens today’s societies. Behind lurks the protracted issue of growing inequality, which could easily be exacerbated by climate policy. Consequently, a new social contract is urgently needed. Insurers can play an important role here too, not only as good corporate citizens but also by embracing the pivot to equality in their business models.