Sustainability secures our future success

It is specifically the dangers posed by climate change that make sustainability a particularly pertinent issue. As greenhouse gas emissions increase, average temperatures are rising. Scientific studies have shown that extreme weather events are becoming more common as a result. In turn, losses from natural disasters have risen significantly, leading to a growing need for insurance solutions to protect against such risks.

For example, according to a recent UN study on extreme weather events prepared by the World Meteorological Organization (WMO), extreme weather phenomena are now four to five times more common than in the 1970s and cause seven times as much damage. According to the study, the 1970s saw an average of 711 extreme weather events per year. In the 2010s, the annual average figure had risen to 3,165. All in all, such weather events have led to losses exceeding USD 3,600 billion since 1970. The WMO put the average annual losses incurred worldwide in the 1970s at USD 175 million, whereas the average figure for the 2010s was USD 1.38 billion (currency values were adjusted to 2018). See WMO (2021): WMO Atlas of Mortality and Economic Losses from Weather, Climate and Water Extremes.

At the same time, it is becoming increasingly difficult to estimate the probability of natural disasters occurring and their impacts. The drastic climate changes mean that historical data can only be used for comparison to a limited extent. As an international insurer, HDI Global SE is particularly affected by this trend. That is why we have been focussing on the consequences of climate change in detail for quite some time.

Creating responsible and sustainable added value is one of our core corporate management principles. We include ecological and social issues in our strategic targets as well as in our management and governance. In our commitment to sustainability we aim to strike the right balance between the interests and needs of all stakeholders – especially of our customers, business partners and employees.

In doing so, we can help establish principles for doing business in a sustainable manner that extend beyond the boundaries of our own company. Ultimately, this also allows us to live up to our social responsibility as an insurer – to protect individuals and enable the economy and companies to function properly.

We are continuously developing and expanding our approach to sustainability in the field of underwriting. All insurance solutions are reviewed for their environmental and social impact as well as their relevance to sustainable development.

In underwriting, the focus is on achieving net zero in our insurance portfolios by 2050 – a target that will be used as a key performance indicator in the future. However, the methods needed to capture the relevant data in the insurance industry are currently still under development.

We have also introduced global underwriting restrictions on coal risks, and from 2038 onwards aim to no longer include any coal power plants or mines in our portfolio. This will ensure that we phase out of coal in a responsible manner in the medium to long term. In 2020, the underwriting policy for coal risks was extended to include oil and tar sands.

Additional initiatives will also play a key role in the Group’s sustainability activities during the current year: For example, cover will no longer be provided on an individual risk basis for greenfield Arctic drilling. We continue to monitor other fossil energy sources and make further risk-based adjustments to our underwriting guidelines. In addition, we are currently developing methods and designing processes to determine and manage our insurance portfolio’s carbon footprint.

As a leading industrial insurer, we consider it our responsibility to act as a partner for businesses and support them in their sustainable transition to a low-carbon economy by engaging in constructive yet critical dialogue. This is done in mainly two ways: On the one hand, we are leveraging the influence we have on the companies that we insure. On the other, we are continuously looking into new, environmentally friendly technologies and their insurability. Today, we are already one of the most important insurers of renewable energy sources such as wind power (both onshore and offshore), photovoltaic and geothermal technology, hydroelectric power, hydrogen production and its use in electricity generation, as well as energy storage technologies. This allows us to successfully support structural change in the energy sector by supplying suitable risk transfer products.