Insurance expert discusses impact of climate change
Rob Wesseling is the executive vice president, National P&C Product, The Co-operators Group Ltd., and chief operating officer, The Sovereign General Insurance Co. He has successfully held a number of senior leadership roles with The Co-operators in areas including product design, pricing and segmentation, technology development, business information, client relationship management, and government relations.
GLOBE spoke with Wesseling about his work with The Co-operators Group and in-line with his participation at the upcoming GLOBE 2014 Conference, taking place in Vancouver, Canada, from March 26-28.
GLOBE: The magnitude and frequency of extreme weather events in North America has grown steadily over the last 15 years. In 2013, there was a record insurable loss of $3 billion in Canada alone, due largely to major flooding in Alberta and Ontario. In general, how is the insurance industry in North America dealing with growing losses of such magnitude on an annual basis? What steps has The Co-operators taken to better prepare for the growing risks?
Rob Wesseling: The frequency and severity of extreme weather events in Canada has increased rapidly over the past two decades. To date the insurance industry has responded by adjusting rates and risk selection criteria and in some cases through the promotion of improved loss prevention like the use of back water valves in residential settings.
This increase in natural disasters (specifically water related) requires a broad based and coordinated response from a number of stakeholders including all three levels of government, builders, developers, lending institutions, insurers, reinsurers as well as home and business owners.
In simple terms Canadians need to model and monetize the natural disaster risk that they are exposed to. Base development and adaptation decisions on this knowledge and finally develop and appropriate solution to transfer the risk that remains.
To this end The Co‐operators is leading an effort to engage key stakeholders to accomplish these goals. Phase one of the work was completed in early June 2013 and punctuated with a study focused on the viability of residential flood insurance in Canada. Phase two is now underway. This phase will engage a broad group of stakeholders and has the goal of gaining agreement on a set of actionable items that will improve the rate of climate change adaptation in Canada.
GLOBE: How does The Co-operators embed sustainability into its business and insurance practices? Do you think that having a “cooperative” business model / structure enhances your organization’s ability to embrace sustainability?
RW: The Co‐operators has traditionally had a significant focus on the betterment of Canadian Society. Over the last decade this focus was cast in the light of sustainability and as a result our focus on environment was enhanced. For several years we developed a sustainability strategy each year that was executed in parallel to our core strategic plan.
This approach worked well for us and ensured that sustainability received the thought and action that was required. Recently we have made the decision to inculcate our sustainability strategy into our core strategic plan. As an organization we believe that we are now at a level of maturity of thinking and actions on this front that sustainability is and should be part of the thinking behind all of our decisions and processes.
GLOBE: The Co-operators recently partnered with Swiss Re and Aviva Canada to support a project on “Building Climate Resilience in Cities,” led by The Next Practice, Ceres, the University of Cambridge, and others. Can you tell us a little about this project and its objectives? What were some of the key priorities that emerged from this work?
RW: The Building Climate Resilience in Cities project focused on three cities in North America – Boston, San Diego, and Toronto. Through a partnership model, Ceres, Swiss Re, Aviva Canada and The Co‐operators convened a group of diverse senior stakeholders representing insurance, banking, investors, builders, developers, municipalities, non‐governmental organizations, and community groups for two‐day workshops.
The purpose of the workshops was to raise awareness of the effect of extreme weather events on our cities and highlight the need for collaborative action to create more resilient cities. Three publications emerged from this process and are publically available (1) Building Resilient Cities – From Risk Assessment to Redevelopment (2) Building Climate Resilience in Cities: Priorities for Collaborative Action and (3) a tool kit with workshop materials. We will continue to engage with Ceres on future resilient city initiatives.
GLOBE: You will be joining other sustainability leaders from around the world at GLOBE 2014 this March 26-28 in Vancouver, Canada, as a speaker in a special session on Extreme Weather & Risk. What message do you hope to bring to the international delegates and audience that will be attending GLOBE 2014?
RW: Climate change is a fact. Regardless of your view of cause more severe weather is unavoidable. There is an immense amount of good work being done globally that is focused on climate change mitigation. In my mind not enough time, effort and resources are being focused on adaption. My key message is a call to action for adaptation.
UK must stop blundering into high carbon choices warns CCC
The UK Government must end a year of climate contradictions and stop blundering on high carbon choices, according to the Climate Change Committee as it released 200 policy recommendations in a progress to Parliament update.
While the rigour of the Climate Change Act helped bring COP26 to the UK, it is not enough for Ministers to point to the Glasgow summit and hope that this will carry the day with the public, the Committee warns. Leadership is required, detail on the steps the UK will take in the coming years, clarity on tax changes and public spending commitments, as well as active engagement with people and businesses across the country.
"It it is hard to discern any comprehensive strategy in the climate plans we have seen in the last 12 months. There are gaps and ambiguities. Climate resilience remains a second-order issue, if it is considered at all. We continue to blunder into high-carbon choices. Our Planning system and other fundamental structures have not been recast to meet our legal and international climate commitments," the update states. "Our message to Government is simple: act quickly – be bold and decisive."
The UK’s record to date is strong in parts, but it has fallen behind on adapting to the changing climate and not yet provided a coherent plan to reduce emissions in the critical decade ahead, according to the Committee.
- Statutory framework for climate The UK has a strong climate framework under the Climate Change Act (2008), with legally-binding emissions targets, a process to integrate climate risks into policy, and a central role for independent evidence-based advice and monitoring. This model has inspired similarclimate legislation across the world.
- Emissions targets The UK has adopted ambitious territorial emissions targets aligned to the Paris Agreement: the Sixth Carbon Budget requires an emissions reduction of 63% from 2019 to 2035, on the way to Net Zero by 2050. These are comprehensive targets covering all greenhouse gases and all sectors, including international aviation and shipping.
- Emissions reduction The UK has a leading record in reducing its own emissions: down by 40% from 1990 to 2019, the largest reduction in the G20, while growing the economy (GDP increased by 78% from 1990 to 2019). The rate of reductions since 2012 (of around 20 MtCO2e annually) is comparable to that needed in the future.
- Climate Risk and Adaptation The UK has undertaken three comprehensive assessments of the climate risks it faces, and the Government has published plans for adapting to those risks. There have been some actions in response, notably in tackling flooding and water scarcity, but overall progress in planning and delivering adaptation is not keeping up with increasing risk. The UK is less prepared for the changing climate now than it was when the previous risk assessment was published five years ago.
- Climate finance The UK has been a strong contributor to international climate finance, having recently doubled its commitment to £11.6 billion in aggregate over 2021/22 to 2025/26. This spend is split between support for cutting emissions and support for adaptation, which is important given significant underfunding of adaptation globally. However, recent cuts to the UK’s overseas aid are undermining these commitments.
In a separate comment, it said the Prime Minister’s Ten-Point Plan was an important statement of ambition, but it has yet to be backed with firm policies.
Baroness Brown, Chair of the Adaptation Committee said: “The UK is leading in diagnosis but lagging in policy and action. This cannot be put off further. We cannot deliver Net Zero without serious action on adaptation. We need action now, followed by a National Adaptation Programme that must be more ambitious; more comprehensive; and better focussed on implementation than its predecessors, to improve national resilience to climate change.”
Priority recommendations for 2021 include setting out capacity and usage requirements for Energy from Waste consistent with plans to improve recycling and waste prevention, and issue guidance to align local authority waste contracts and planning policy to these targets; develop (with DIT) the option of applying either border carbon tariffs or minimum standards to imports of selected embedded-emission-intense industrial and agricultural products and fuels; and implement a public engagement programme about national adaptation objectives, acceptable levels of risk, desired resilience standards, how to address inequalities, and responsibilities across society.
Drax Group CEO Will Gardiner said the report is another reminder that if the UK is to meet its ambitious climate targets there is an urgent need to scale up bioenergy with carbon capture and storage (BECCS).
"As the world’s leading generator and supplier of sustainable bioenergy there is no better place to deliver BECCS at scale than at Drax in the UK. We are ready to invest in and deliver this world-leading green technology, which would support clean growth in the north of England, create tens of thousands of jobs and put the UK at the forefront of combatting climate change."
Drax Group is kickstarting the planning process to build a new underground pumped hydro storage power station – more than doubling the electricity generating capacity at its iconic Cruachan facility in Scotland. The 600MW power station will be located inside Ben Cruachan – Argyll’s highest mountain – and increase the site’s total capacity to 1.04GW (click here).
Lockdown measures led to a record decrease in UK emissions in 2020 of 13% from the previous year. The largest falls were in aviation (-60%), shipping (-24%) and surface transport (-18%). While some of this change could persist (e.g. business travellers accounted for 15-25% of UK air passengers before the pandemic), much is already rebounding with HGV and van travel back to pre-pandemic levels, while car use, which at one point was down by two-thirds, only 20% below pre-pandemic levels.