Waking up to the news that Munich Re had withdrawn from four major climate alliances – including the Net Zero Asset Owner Alliance (NZAOA) – felt all too familiar.
It was, after all, on a sunny spring Friday in March 2023 that the same German reinsurer made headlines for leaving the UN-convened Net Zero Insurance Alliance (NZIA). That decision triggered a chain reaction that saw a large chunk of its near-30 members, including Zurich, Swiss Re, Scor, Axa and Allianz, follow suit.
And where did that leave the NZIA? In steady decline, eventually replaced just over a year later by a broader but diluted UN Forum for Insuring the Transition to Net Zero.
This time, Munich Re cited similar legal concerns for its departure from the NZAOA, as well as the Net Zero Asset Managers Initiative, Climate Action 100+ and the Institutional Investors Group on Climate Change.
The reinsurer pointed to "increasing ambiguity" in assessing private initiatives under varying legal and regulatory regimes, which it said could lead to conflicting requirements and legal uncertainty. It also noted that climate-related disclosures and associated administrative demands had become "very complex".
Whether Munich Re's latest move will spark another mass departure from these voluntary initiatives is unclear. But the parallels are striking and, frankly, unsettling.
Despite the uncertainty surrounding alliance memberships, insurers' focus on escalating climate risks remains clear. At the Insurance Europe conference held in Brussels last week, the topic dominated discussion.
The message was made clearest by the European Commissioner for Climate, Net Zero and Clean Growth, who pleaded for the assistance of insurers in combatting escalating risks from climate change.
"I need your help", Wopke Hoekstra told the audience, stressing that insurers will be key for protecting citizens, business and the economy as a whole against these hazards.
Across the Atlantic, California insurance commissioner Ricardo Lara used the opening of the Global Sustainable Insurance Summit on 19 May to make a similar appeal to the US insurance sector, calling it a "tool to mitigation, to recovery and to protect our climate".
This has been accompanied by more stark reminders of climate change impacts.
The German Insurance Association (GDV) released data showing that flood and heavy rain caused €2.6bn ($3bn) in insured damage in Germany last year – more than twice the long-term average and up from €1bn in 2023.
It was a similar story on the other side of the world, where the Insurance Council of Australia (ICA) CEO Andrew Hall said: "Australia really has left a whole cohort of people behind, living in dangerous flood areas." The ICA noted less than one in four Australian homeowners living with a 5% annual exceedance probability of flooding are insured.
This issue was also raised at Insurance Europe's conference, where underinsurance of natural catastrophe risks came under scrutiny. It follows a calls from the European Insurance and Occupational Pensions Authority for clearer and more consumer-friendly information on natural catastrophe) coverage in home insurance policies.
Elsewhere in the climate and sustainability space, Aon has updated its Climate Risk Monitor re/insurance tool to include quantification of tropical cyclones and floods, a redesigned user interface, and direct client access.
Meanwhile, research from ShareAction has revealed that up to 85% of European insurers could be exempted from sustainability reporting requirements under proposed changes to the EU's Corporate Sustainability Reporting Directive.
