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Carbon insurance – is 2024 the year of action?

In this month’s issue of Climate Risk, we cover the developments in the carbon insurance markets including multiple new projects and funding rounds.

Climate Risk is InsTech’s monthly newsletter dedicated to sustainability and climate-related insurance news.

Carbon insurance – is 2024 the year of action?

By 2030, the voluntary carbon market is predicted to reach $40 billion. But complex risks threaten its ability to scale rapidly – which is where insurance can come in. According to Charlie Pool, Head of Carbon Insurance at Howden:

“One of the biggest challenges with the voluntary carbon market is that it is hard to obtain financing for the underlying projects that generate the carbon credits. Projects are typically long-term, located in emerging markets and involve infrastructure risks. On top of that there are also the nuances of the carbon markets – from the verification process through to the issuance of the credits. These complex risks can put off financers, but insurance could help mitigate many of these concerns.”

At InsTech, we have been hearing a lot of interest around carbon credit insurance over the last few years – but 2024 seems to be the year of action. The last few months have seen multiple new projects and funding rounds within the carbon insurance space.

Oka launched its Lloyd’s syndicate-in-a-box in January, followed by its embedded insurance product which protects buyers against reversal and invalidation of credits.

Last month, Lloyd’s Coverholder Kita launched a product for buyers and investors of forward-purchased enhanced rock weathering carbon credits. Also in March, specialist insurer CFC entered the carbon market with a new product, partnering with environmental markets specialist IncubEx.

As well as new products being launched, several companies have received funding this year. CarbonPool has raised $12 million USD to underwrite the carbon credit markets, with Oka also securing funding this month.

After a lot of discussion in the industry, we’re excited to see movements in the carbon insurance market. With increasing interest from insurers and financers, we expect to see more products launched over the rest of 2024.

Live Chat: From analysis to action: supporting sustainable decisions in home insurance, 22nd April

Technology company Gamma and insurer AXA have partnered to offer ‘Go Green’: a platform that provides tailored home retrofit suggestions to improve sustainability and reduce energy costs. Join Richard Garry, Chief Commercial Officer at Gamma and Murray Nolan, Product Manager at AXA Ireland to hear how they are helping to put sustainability into practice.

Evening Event: Is your data too hot, too cold or just right?, 23rd April

Are you having a Goldilocks moment and struggling to find the data that suits your needs? For our next evening event – supported by Guidewire – we’re bringing together companies that help insurers make better decisions about risk selection, portfolio management and claims. Join us on 23rd April to hear from companies including Addresscloud, Allianz, GeoSmart, JBA Risk Management, Tensorflight and Twinn.

Networking Event: Sustainability in insurance, 2nd May

While every insurance company is at a different stage on its sustainability journey, a lot can be learned from sharing experiences and knowledge. On 2nd May, in collaboration with Atrium and Convex, we are hosting an event to bring together the insurance leaders working on climate and sustainability. If you work in a sustainability role at an insurer or broker and are interested in attending, email us at [email protected].

Webinar: A decade of discovery: 5 key developments in flood risk modelling

JBA Risk Management has been providing insurers with global flood maps for over a decade. Join us to explore the most important technological developments that have occurred during this time – including the use of artificial intelligence and heightened computing power – to see what this means for the insurance industry’s understanding of flood risk.

Previsico: Managing your flood risk – stories from the frontline

Previsico provides real-time forecasts and early warnings to help limit the impact of surface water flooding. For podcast episode 295, Matthew Grant was joined by Previsico and two of its clients, Zurich Municipal and Donaldson Timber, to discuss how the company has helped them with flood risk management.

HDI TH!NX: Insurer-led innovation

HDI TH!NX was founded in 2019 by Verena Brenner, initially operating within the German insurer HDI Global, as an incubator for IIoT (industrial internet of things) solutions. Now providing software to support risk management for insurers and their clients, tune in to hear Verena discuss the mechanics behind founding a startup and HDI TH!NX’s growth in the ESG space.

Issured: Enabling sustainability in claims

Technology company Issured is using its background in counterterrorism policing to make insurance claims processes more secure, efficient and sustainable. Read the full article to learn how insurer Zurich has been using Issured’s technology to meet 70% of its claims investigation team’s sustainability target.

In the news…  
Carbon insurer Oka raises $10 million

Oka, a provider of carbon credit insurance, launched its Lloyd’s syndicate-in-a-box earlier this year. It has partnered with three reinsurance providers, with Greenlight Re providing capacity for Oka’s first three years of operation. To learn more about Oka and the carbon credit insurance market, you can download our 2023 report here.

Chaucer launches parametric weather product for NDBI

(Re)insurer Chaucer has entered the parametric weather risk transfer space, offering a product for weather-driven non-damage business interruption. The coverage is based on temperature, wind speed, rainfall and other weather metrics worldwide. Chaucer says it plans to cover non-damage business interruption risks relating to weather, with a line size of up to $5 million USD.

Fathom’s flood data now available through Swiss Re’s platform

After acquiring the flood modeller last year, Swiss Re has made Fathom’s US Flood Map available on its risk assessment platform, CatNet. The tool is used by organisations to analyse their exposure to natural catastrophe risk. Users can now access multiple flood risk models on the platform.

Chubb launches self-service flood insurance platform

Chubb Personal Risk Services (PRS) has launched ‘Flood Insurance System’, a self-service tool for agents. According to Chubb, agents will be able to receive quotes for low-hazard properties in under two minutes. The system will be available across all US states where Chubb writes flood insurance.

Optalitix partners with First Street for climate data

Optalitix provides several software products to (re)insurers and MGAs, including a pricing platform and underwriter workbench. It has partnered with data provider First Street to offer physical climate risk data through the Optalitix pricing and underwriting platform. The data covers flood, wildfire, heat, air quality and wind for properties across the US. You can learn more about Optalitix in InsTech podcast episode 298 with Co-founder & Director, Dani Katz.

Cytora partners with Chimnie for UK property data

Chimnie’s UK property data will now be available on Cytora’s risk processing platform. The data includes information on building construction, physical attributes, topology, valuation, risk and perils, demographics and environment. To provide this data, Chimnie combines AI modelling with open data sources such as the Ordnance Survey and British Geological Survey.

Tensorflight partners with NEXT Insurance and Maptycs

NEXT Insurance, a small business insurer, will use Tensorflight’s platform to help underwrite commercial properties. Tensorflight has also recently partnered with geospatial solutions provider Maptycs. To learn more about Tensorflight, listen to the company’s CEO on InsTech podcast episode 269.

Previsico to host flood risk innovation event at Lloyd’s

The event will bring together water companies, insurers and brokers to discuss the use of technology for managing flood risk. There will be speakers from companies including AXA XL and Descartes – you can register to attend on 8th May here.

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