Shaun-Tarbuck ICMIF

Can the insurance industry direct its vast assets under management to invest in socially relevant issues like resilience and disaster recovery? Shaun Tarbuck, Chief Executive of the International Cooperative and Mutual Insurance Federation (ICMIF), addressed the 2015 IIS Global Insurance Forum during a session at the United Nations. He unveiled what he called a “Smart Risk” Investing Framework, which would provide guidance for directing investments made by insurance companies

The ICMIF Chief Executive mentioned the importance of the Sendai Framework for Disaster Risk Reduction, published by the UN World Conference on Disaster Risk Reduction in March 2015, which looks to prevent and reduce hazard exposure and vulnerability to disaster, increase preparedness for response and recovery, and strengthen resilience. The codes in the Sendai agreement provide the insurance industry with information that can guide underwriting and investment.   He believes agreements like the Sendai Framework should inform investment and underwriting decisions.

Mr. Tarbuck sees an excellent opportunity for the insurance industry to show leadership. He says the Smart Risk Investing Framework provides the means for the sector to use what is known in the (risk) modeled world and apply it to the asset side. He believes underwriters sharing knowledge with those responsible for investing would be a “sea change.” The opportunity lies in ushering the industry’s $35 trillion in invested assets to help build a resilient world.

“At the end of the day, there are two organizations that ultimately pay for natural disasters: the insurance industry and governments.” With government’s lacking sufficient funds, the insurance industry has a vested interest in better directing its investments wisely and creating opportunities for new business.

The IIS and ICMIF have begun assembling information from members regarding potential “Smart Investing” opportunities, including equities, bonds, portfolios, etc. Only a year ago, Mr. Tarbuck says the insurance industry had less than one tenth of one percent ($42 billion) in resilience areas. He has committed the industry to doubling their investment by the end of 2015, and increasing “smart investing’ ten-fold by 2020. With large ICMIF members already committing, and stock companies participating this year, Mr. Tarbuck believes doubling investments will be achieved…and “that’s just the beginning of the conversation.”

Mr. Tarbuck says a task force of “movers and shakers” in the underwriting and investment world are driving the definitions and framework going forward, for release at the ICMIF Conference in Minneapolis in October, before UN Secretary General Ban Ki-moon announces the initiative at the Conference of Parties (COP) 21 in December.

“This isn’t another green initiative.” Mr. Tarbuck says Smart Investing supports business objectives, including sustainable growth and making the industry more relevant.

For more of our coverage from the IIS Global Insurance Forum, visit the On Demand Library.

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