No broker or insurer has come forward to claim relationship with fatal Ikoyi high-rise

AS THE CLIMATE EMERGENCY intensifies, insurers are under growing pressure to withdraw insurance and investment from fossil fuels production and generation which are not consistent with 1.5°C. The industry is not only being urged to take immediate action on coal, but on oil and gas, too, according to a new scorecard measuring the response of the insurance industry on fossil fuels amid climate change campaigns.

Calls to action now sound from all quarters, from powerful United States senators – who in March wrote directly to major U.S. insurance companies for the first time about the conflict between their support for fossil fuels and their sustainability pledges – to UN secretary-general, António Guterres, who in June addressed the Insurance Development Forum (IDF), saying, “We need net zero commitments to cover your underwriting portfolios, and this should include coal – and all fossil fuels.”

Mainstream opinion within the insurance industry has also shifted. In July, Ekhosuehi Iyahen, the secretary-general of IDF, there has yet to be an insurer litigation test case, “the frequency and diversity of legal actions addressing climate change are increasing,” and that “the increasing effects of slowmoving echoed Guterres’ plea, urging U.S. insurers to show more ambition. In the same month, the Geneva Association, an insurance CEOs think-tank, when delivering its annual women in insurance award for commitment to driving the reduction of coal underwriting, for the first time, publicly welcomed insurers’ withdrawal from coal, recognising it as “the most polluting and carbon-intensive fuel”.

Meanwhile, markets are now rewarding insurers that act on fossil fuels. In December 2020, French bank, Société Générale, found that insurers with strong coal and environmental, social governance (ESG) policies are adding billions to their value, potentially increasing market capitalization by up to +9 percent, and positioning insurers to seize opportunities in the low-carbon economy of the future.

ESG evaluates a company’s collective thoroughness for social and environmental factors, aimed at showing how the company’s business model – its products and services – contribute to sustainable development.

Conversely, insurers that duck society’s expectations on fossil fuels face repercussions. For instance, impacts of climate-change similarly increase the likelihood of climate change litigation.”

Meanwhile, Mike Hayes, a senior vice president with Berkley Offshore Legal & General Investment Management (LGIM) penalizes companies that breach its red lines. For insurers, this is “No restrictions around coal underwriting/investing.”

In June this year, LGIM showed that it meant business by divesting funds from U.S. insurer AIG, citing the company’s lack of thermal coal underwriting policy.

Also, providers of global sustainability disclosure, rating, and benchmark systems created their own ‘red lines’ this year by tightening the criteria for assessing insurance companies on coal, oil and gas.

CDP, a global non-profit organisation, and the World Benchmarking Alliance made underwriting and investment policies, excluding fossil fuels, key metrics in assessing insurers’ climate commitments.

Willis Towers Watson, global broker, in June, decided to title its annual power market review, ‘Adapting to New Realities’, concluding that the International Energy Agency’s (IEA) zero new coal, oil or gas roadmap “reflects a significant proportion of the global media and public opinion.”

Underwriting Managers, has warned that the market should take the risk of class action suits “very seriously”. He noted that “there is always the concern in the back of

THE NIGERIAN COUN CIL OF REGISTERED Insurance Brokers (NCRIB), the organised body for insurance brokers in Nigeria representing the group of professionals who act as intermediaries between insurance companies and those who buy insurance services, over the weekend, said there appears to be no relationship between the builders, promoters and owners of the 21-storey high rise which collapsed in Ikoyi, Lagos and any underwriter or broker in the insurance industry.

The body said no insurer or insurance broker has come forward to say they were associated with the building or the project in any way as of the weekend.

Tope Daramola, executive secretary of the insurance brokers body, who spoke on the sidelines of the NCRIB Special Day at the 2021 Lagos International Trade Fair (LITF) in Lagos, expressed disappointment on the fatal loss recorded from the unfortunate incident.

“The fatal loss recorded from the incident is unfortunate, but as at today, no underwriter or broker has claimed any relationship with the collapsed building.

“The implication of this is a total loss for everyone involved, and sadly for those who lost their lives, if no insurer eventually shows up to take up the claims,” he said.

According to him, the government must stop paying lip service to giving insurance the impetus it needs.

Daramola noted that nothing stops the National Assembly from legislating to back compulsory insurance on storey buildings as the compulsory motor insurance policy and also enforce it with the law enforcement agencies.

Such legislation would translate into higher return for the industry, as insurance operators would employ more, thereby reducing unemployment and social problems, and also contributing to the gross domestic products (GDP), he said.

The 21-storey building, which was under construction in Ikoyi, Lagos collapsed on November 1, and led to the death of no fewer than 43 persons.

Babajide Sanwo-Olu, the governor of Lagos State has set up an investigative panel to examine the possible causes of the building collapse.