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Estelle Guyon Abinal (AXA France): “An insurance company does not only manage risks, it helps to prevent them”

On the occasion of the 3rd Security & Resilience Forum organized by WE DEMAIN on October 25 at the General Directorate of the National Gendarmerie, Estelle Guyon Abinal, Secretary General of AXA France, participated in a round table discussion that addressed a crucial issue in the light of global warming and all the disturbances resulting from it: “Are environmental risks still manageable?”

According to a report by France Assureurs on the impact of climate change by 2050, the cumulative cost of drought risk alone for insurance companies should fall from 13.8 billion euros cumulatively in the period 1999-2019 to 43 billion euros. euros in the next 30 years. The forum was the occasion for WE DEMAIN to have an in-depth interview with Estelle Guyon Abinal about the future of the insurance industry.

WEDEMAIN: How is AXA preparing to tackle climate change?

Estelle Guyon Abinal: As an insurance company, we influence the climate in three ways: insurer, investor and employer. On the one hand, as an insurance company: How do you respond to a customer in a disaster situation, including if it is linked to climatic risks. In this context, we prefer to be in the action upstream than in the simple reaction. An insurance company not only manages risks, it also helps prevent them.

That is why we develop what we call “green business”, i.e. we envision products and services with a positive impact on the environment. More interesting insurance products in relation to prices for driving an electric car, incentive to use recycled parts for car repairs, etc. For businesses, we will also encourage them to make repairs that will reduce their carbon footprint. For example, a company that wants to change heating after an incident will benefit from financial support to equip itself with geothermal heating rather than reinstalling oil heating.

And as an investor?

An insurance company has significant financial assets. This is counted in hundreds of billions of euros [600 milliards d’euros pour le groupe Axa, ndlr]. In this area, we have very specific objectives to promote green investments and support companies in transition. We were also the first to exit the coal industry as an investor in 2015, but also from oil and oil sands in 2017. In 2021, we have further reduced our list of business sectors in which we agree to invest to promote the overall reduction of our CO2 footprint.

Finally, what are your initiatives as an employer?

AXA has invested in buildings with low carbon content, hybrid or electric cars, etc. Since 2012, we have reduced our carbon footprint by 60%. And we aim to reduce it by a further 20% by 2025. And to this original target we have recently added the energy sobriety targets that the government has called for.

Today, 100% of our sites in France run on renewable energy, green electricity. We are also working to reduce the energy impact of all our data centers and IT equipment (storing fewer emails, turning off screens that are not in use, etc.).

Faced with climate change, how do you anticipate major changes to prepare for developments?

As an insurance company, we are there to support and influence changes in society. That’s how it’s always been in history. It was because there were insurance companies that agreed to support shipowners that it was possible to charter large ships and that world shipping took off from the 17th century. In the 1950s, it was because there were insurers and reinsurers able to pool their financial capacity within the Assuratome pool that the risks associated with civilian nuclear energy became insurable and that France was able to increase its energy independence with the construction of nuclear power plants.

Third example: In 1982, France implemented the CatNat scheme [catastrophes naturelles, ndlr]. It is a partnership between insurance companies, reinsurance companies and the state, and which allows the management of natural disasters (floods, droughts, etc.) in highly specific cases with an extremely monitored mechanism. In particular, this entails a ruling that declares a state of natural disaster after consultation with an inter-ministerial commission, which ensures the neutrality and homogeneity of the concept of natural disaster.

In these three examples, and there are many others, we see that pool mechanisms, possibly integrating the state, make it possible to deal with large events that would otherwise be uninsured, and therefore make it possible to better support society and the economy. .

What will happen if there is an imbalance and a multiplication of these natural disasters?

Insurance is a mechanism based on the pooling of risks: many people pay a small amount to be covered against a disaster that happens very rarely. If the spread of natural disasters causes us to move from rare disasters to more massive forms, but with very high costs, we may find ourselves in a situation that may become uninsurable. A risk that becomes systemic can no longer be insured. For now, intermediate solutions like CatNat still hold up. Everything must be done to prevent this risk from becoming systemic. This involves public/private partnerships, individual prevention and long-term measures to act for the environment and especially to reduce CO2 emissions.

Today, we are not yet in the case where risks can no longer be insured, but this is actually part of the considerations. Initially, the solution will be to adjust the premium [le montant à payer par le particulier ou l’entreprise pour être assuré, ndlr]. If tomorrow a risk becomes so high in one place that it is no longer bearable by an insurance company alone, one could imagine having mandatory insurance schemes and concerted actions between vulnerable people, insurance companies and reinsurance companies and public actors. And it is also about realizing that certain areas, such as floodplains, should no longer be inhabited. We need the PLU (Local Urban Plan) established and applied more rigorously than what has been done in the last 50 years.

Are there any joint future considerations between insurance companies and the government on these issues?

Of course. The insurance business is a long-term business. I would like to talk about an example that relates to one of our fundamental elements, namely agriculture. Today, in the face of climate change, in the face of increasing hailstorms with serious consequences for the harvest. The state, insurance companies and farmers (via FNSEA) are working together to create a long-lasting, viable and sustainable system where every stakeholder will be an actor.

First of all, farmers would be strongly encouraged by a subsidy mechanism to insure their crops because hail is too frequent a risk for them to protect themselves against. Secondly, insurance companies and reinsurance companies will be able to cooperate within a pool. Third, when demands exceed a certain level, there will be government intervention.

How do you act on a global scale to influence the reduction of greenhouse gas emissions?

AXA has just published for the 9th year in a row a very comprehensive report, the Axa Future Risks Report, to point out the risks of the future and reflect on how they should be handled. Unsurprisingly, climate risk appears at the top of the ranking as for the previous 5 years, but what is new this year is that it is number 1 according to experts from all regions of the world, especially the United States. This realization is encouraging, but action is needed.

AXA was behind the creation of the Net-Zero Insurance Alliance (NZIA), which was officially launched in April 2021 within the United Nations Environment Programme. It includes around thirty companies, including two major French players, AXA and Scor, one of the world’s largest reinsurers. At NZIA we are committed to making our client portfolios net zero carbon by 2050. The aim is to have enormous leverage to act upstream and influence the companies we insure.

They must now sign a four-page charter committing them to the ecological transition. For our part, we are committed to supporting them in this process. But this is not wishful thinking. If three quantified targets are not met within the deadlines, these companies will no longer be insured by AXA or one of the members of NZIA. The goal is to encourage these companies to change radically, otherwise they will no longer find an insurance company in the medium to long term. It is anything but trivial. Faced with the challenges of climate change, biodiversity loss and environmental protection, insurance companies have a big role to play.

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