Loss of biodiversity is now being recognised as a major material threat to policy providers.
On Wednesday 13th May, government figures, insurance industry experts and other stakeholders attended an event at Lloyd’s as part of Nature Tech Week. The focus was on new technologies which can be reshape how the insurance sector measures and monitors risk, and ultimately prices policies and products.
During the panel — which included Oliver Vaughan, Head of Earth Observation at DEFRA, and Luke Knowles, head of catastrophe risk analytics at Lloyd’s of London — the Biodiversity Net Gain project insurance market was discussed at length. European countries now dominate this sector, accounting for 38% of all global revenue as of 2024.
But nature based risks are now an important consideration in all areas of property and investment protection, with catastrophe modelling and long-term portfolio exposure both increasingly impacted by perceived and real climate threats. As such, tools which are aligned with nature and ecological datasets are now being see as critical to a functioning insurance industry.
‘Nature risk is now inseparable from financial risk. To support effective underwriting and for long term resilience, insurers need data that is transparent and auditable, that they can interrogate and scale,’ said Lexi Smith, founder and CEO of Pemberton, and co-organiser of the event in collaboration with Montgomery Group.
‘Our event emphasised the need for shared standards, improved data interoperability and closer collaboration between insurers, policymakers and technology providers,’ she continued. ‘Understanding the value of data and being able to trust it, as well as interoperability in terms of how data works together within bigger models to stay globally competitive was a key takeaway.’
Environment Journal has reported extensively on the increasingly worrisome relationship between insurability and the climate crisis. This runs from Californian homeowners being refused cover due to wildfires, to the British flood defence app helping regulators, landlords and property owners understand how much they are at risk.
Image: BEN ELLIOTT / Unsplash
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