1st Edition

Insurance, Climate Change and the Law

By Franziska Arnold-Dwyer Copyright 2024
    394 Pages 2 B/W Illustrations
    by Informa Law from Routledge

    394 Pages 2 B/W Illustrations
    by Informa Law from Routledge

    The insurance industry has found itself at the front line of climate change challenges, providing insurance cover in relation to risks associated with climate change. As risk carriers, insurers pay claims for climate change related losses – such as property damage caused by windstorms, flooding, and wildfires – which have been increasing in frequency and severity.

    As major institutional investors, insurance companies invest in assets that may be increasingly vulnerable to climate risks. Insurance regulators across the globe have therefore started to require insurance companies to identify, manage, and report on climate change risks that could pose a threat to their financial stability. However, managing and reporting on the effect of climate risk on an insurer’s balance sheet is an inward-looking perspective that does not stem climate change. It needs to be paired with an outward-looking perspective that takes account of the insurance industry’s impact on the environment and the insurance industry’s capacity to influence what policyholders, investee enterprises, and other business partners do to address climate change challenges. For the insurance industry, the key components of positive outward impact are ‘impact underwriting’ and ‘impact investment.’ This book sets out the current legal and regulatory landscape for impact underwriting and impact investment. Whilst the focus of research and regulatory interventions to date has been on inward impact, in this book it will be argued that, to take positive climate action that supports the Paris Agreement goals and the national and international Net Zero targets, the debate should now move on to considering the positive outward impact the insurance industry can make and how we can create a legal environment to facilitate this.

    The book puts forward the case for a new vision of the role of the insurance industry as climate action enablers and makes proposals for insurance products and risk transfer and loss resilience structures that can support policyholders in their transition to a Net Zero economy. The audience for this book will include legal practitioners, insurance industry professionals, financial and insurance regulators, policymakers, and interested academics.

    1. Introduction 2. Climate change: The science, the international stage, terminology, and boundaries 3. Climate change risks and the role of insurers 4. Climate change risk assessment and regulation 5. Climate-related disclosures 6. Insuring green and not insuring brown 7. Greening insurance 8. Climate-related impact investment and stewardship 9. The role of government and public-private insurance solutions 10. Conclusion: Insurers as climate action enablers


    Franziska Arnold-Dwyer is a Senior Lecturer in Insurance Law, Contract Law, and Sustainability and the Director of the Insurance, Shipping, and Aviation Law Institute at the Centre for Commercial Law Studies, Queen Mary University of London. She holds a Ph.D. in Commercial Law and is a qualified solicitor (England and Wales). Her research interests are insurance law and insurance solutions, and in particular the intersection of insurance contract law, insurance regulation, risk governance, and sustainability.

    ‘This is an outstanding and innovative book from one of the UK’s leading academic insurance lawyers. The relationship between climate change and insurance is much discussed but this is the first comprehensive study, covering the international regime governing climate change, the liabilities that may arise and their insurability, the development of new insurance products and the incidence of public-private solutions to large scale losses. Fascinating reading for insurers, lawyers, brokers, academics and indeed scientists.’

    Prof. Robert Merkin KC

    , Professor of Law, University of Reading and Special Counsel, Duncan Cotterill, UK

    ‘This book is an essential and comprehensive reference guide for anyone in the insurance industry who is interested or involved in the intersection of insurance and climate change. It provides thought-provoking views on the role of the insurance industry in addressing the global threat of climate change.’

    Julian Enoizi

    , Chief Executive Officer, Guy Carpenter Europe, UK

    ‘Dr. Arnold-Dwyer's book is one of those for which the reader has been urgently waiting. For the first time, the triangular relationship of insurance, law and climate change is comprehensively discussed. With scholarly thoroughness, the interplay of these three elements is fundamentally examined. On this basis, important impulses are given for combating climate change through insurance. Quite simply, a must read.’

    Prof. Dr. Dr. h.c. Helmut Heiss

    , Professor of Private Law, Comparative Law and International Private Law, University of Zürich

    ‘Insurance is both an underlying engine of many economies and also a key financial market for tackling climate change. This book lays out how insurance companies can act upon climate change both through the policies they write and the investments they make. Importantly the book is grounded in a legal framework that explains how the contractual relationships and regulatory obligations of insurance companies can also be used to leverage action on climate change. I expect it to be an important resource for scholars and policymakers on this very topical issue.'

    Prof. Paula Jarzabkowski FBA

    , Professor of Strategic Management UQ Business School, University of Queensland and Bayes Business School (formerly Cass), City, University of London