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Zurich North America presenters made the case for insurers playing a critical role in protecting customers and communities from the risks of climate change.

As historic droughts threaten water supplies in the West and Puerto Rico reels from the catastrophic effects of Hurricane Fiona, insurance professionals gathered in Philadelphia to talk about risk, including climate change risk.

Zurich North America presented a session titled, “Resilience & Sustainability: The Insurer’s Role,” at the Philly I-Day 2022 event on Sept. 20 in Philadelphia.

Presenters Adam Hurley, Head of Property Risk Engineering for Zurich Resilience Solutions, and Bart Shachnow, Head of Zurich Academy, made the case for insurers and other risk professionals playing a major role in climate resilience and sustainability for their customers and communities at large.

Human-caused climate change is having a significant impact on the physical environment, ecosystems, and societies. Greenhouse gas emissions have caused rising temperatures, resulting in loss of Arctic sea ice, accelerated sea level rise, longer and more intense heat waves, and more frequent and more severe wildfires and windstorms. If unabated, climate change will impact human health, food security, agriculture and marine food production, access to fresh water supplies, and economic uncertainty and insecurity.

During the hour-long session, the presenters explained why businesses must develop holistic, enterprise-wide strategies to cope with climate change. This begins with identifying the risks associated with climate change, including physical risks to property and people, transition risks, ability to access resources and supplies, legal exposures, and risks to company reputation.

The Zurich presenters said it was important to focus on the risk, not just the hazard. As an example, they displayed an image of a seaport with thousands of new cars in a region not likely to suffer from a hailstorm. They contrasted that with an image of a community playground that was in an area known for flooding. The takeaway was that thousands of cars were exposed, but the risk of loss was small. The risk of flooding at the park was high, but the loss would be minimal.

“You can’t just assess the hazard,” Hurley said. “When you think about high-hazard hurricane zones, we all could probably say where we expect hurricanes to hit or flooding to take place, because it’s happened in the past. But we need to look at both: What’s the likelihood of an event, but also how bad could it be if the unexpected happens.”

Hurley said it is critical for insurers and brokers to have meaningful conversations with customers about climate risks and their sustainability efforts. There is more than property risk at stake if businesses make promises they can’t keep.

“We're already starting to see lawsuits come out, ‘greenwashing’ lawsuits where people have made public statements around how green an organization will be by certain timeframe,” he said. “Are they able to measure that? Are they able to truly put in a financial disclosure that they've made it there or are on their way there?”

Hurley and Shachnow spoke about how the pharmaceutical industry in Puerto Rico is better prepared to withstand severe storms, but in the absence of strong community resilience, manufacturing operations can be shut down.

“You can be the only one with the lights on, but if no one can get to work because the bridge is washed out, it becomes a real challenge,” Hurley said.

Shachnow concluded the presentation acknowledging that the insurance industry is not the most beloved industry, but insurers and risk managers play a critical role in the success of businesses.

“We’re the most important advisors our clients have,” Shachnow said. “These things that we’ve been talking about are inevitable. We either have to get on the train or you’re going to be run over.”

​Philly I-Day started more than 60 years ago with the purpose of providing a day of education and networking opportunities for Delaware Valley professionals in the insurance, brokerage, risk, claims management and legal communities. It is presented by the Insurance Society of Philadelphia and the Philadelphia CPCU Society Chapter. Zurich was a sponsor of the event.