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AXA’s Martin Powell: Innovating to insure the transition

by MARCEL le gouais

A global temperature rise of 1.5°C over the coming decades will mean a slump in economic growth of 8% across the world, but the insurance industry has an enormous role to play in preventing this ominous future for millions of people. 

This was one of the takeaways from a keynote presentation by AXA Group Sustainability director Martin Powell at the Sustainable Insurance Summit on 21 February.  

Powell set out the disaster scenarios that might play out if global temperature rises continue unabated, but also examples of how insurance and its extended services are making a tangible difference to sustainability practices and the systemic reduction of carbon emissions. 

Powell highlighted statistics emphasising why the insurance sector needs to help curb temperature rises, and the task that lies ahead for the global economy: 

  • While around $5trn of investment is required to deliver the climate transition, some academics argue the total needs to be 15 times that number;
  • For the past 10 years around $500bn has been spent worldwide on the energy and climate transition. but this figure needs to increase by around 10 times;
  • In France alone, if temperatures keep increasing at the current rate, annual insurance claims for natural catastrophes will double.

Powell summarised some of the initiatives and products AXA has launched to play its role in the sustainability transition. One major solution is its newly launched Green Guarantee.

Operating on a similar principle to ‘build back better’ in the UK, the Green Guarantee helps customers with damage prevention and climate adaptation measures. It also provides assistance with energy renovation measures after a loss and the ability to cut carbon emissions in the reparations covered by insurance.

AXA’s Green Guarantee product features include:

  • Co-financing up to 50% of the additional costs for replacing damaged property with more sustainable processes;
  • Helping cover the costs of improved thermal insulation, solar power, as well as renewable energy or low-emission heating systems;
  • 24-hour meteorological monitoring, alerts and prevention;
  • Recommendations for reacting to natural disasters and the systematic deployment of a local crisis centre immediately upon a loss event;
  • An emergency fund for support during extreme events.

Blue carbon
The act of sequestering and storing carbon dioxide in the ocean – sometimes termed blue carbon in the insurance industry – will present opportunities at scale for carriers during the next 50 years, Powell said.

Areas where insurers can support projects to spur growth in this market include:

  • Dissolved CO2 in the oceans can be transformed into calcium carbonate, which presents a way to store carbon. Technology firms attempting to do this need capital and various forms of support, including insurance solutions, to develop in this field;
  • Biodegradable robots are being used to grow kelp, before falling to the ocean floor when the help is fully grown, where kelp absorbs carbon. The firms behind this technology also present opportunities to innovative insurers.

Championing internal innovation
While insurers will have different approaches to product innovation, AXA runs an ‘innovation cup’ for which AXA staff competed to launch their ideas. One new solution developed through the innovation cup is excess emissions insurance for ships and vessels.

This policy functions by contributing to ship operators’ carbon removal and avoidance projects. It covers operators against the additional emissions they make in a loss event, such as when forced to deviate from a course, and the indemnity is paid in voluntary carbon credits.

Time to accelerate
When asked for insights on how to determine the feasibility of new sustainability-based products given the demand for better data to inform pricing, Powell said the industry needs to gather data faster.

“We’re in a society now where we can use AI and machine learning to grab what’s out there and learn faster. That means we can start faster. This is something we as a company are looking into, quite significantly.”