There is a growing focus on climate change across the globe. In the Non-life sector, we consider climate change to be an emerging risk. Part of my role in the Financial Risk Department is to look at what the impact is going to be for NN. Climate change would lead to more catastrophic events – we already see a rise in windstorms, hailstorms, and flooding events. Rising sea levels pose another systemic risk. For Non-life, for example, an increase in the severity and frequency of windstorms would lead to an increase claim severity for the property book we have insured. If we do not project these types of risks correctly then we do not price the policy correctly.
We divide climate risk into three categories: physical risk – arising due to increased catastrophe events; transition risk – arising due to a move to a carbon-neutral world; and liability risk – arising due to increased litigations. This poses both a challenge and an opportunity for insurance companies. If there are more windmills to replace coal-driven energy, that is a transition. As an insurer, we need to be aware of the path we take. NN Group has already taken a step with establishing a Coal policy which outlines the phase-out plans from thermal coal for both its investment and underwriting portfolios. If we move along with the transition then it becomes an opportunity.
NN is part of the Task Force on Climate-related Financial Disclosures (TCFD). This is an industry-led initiative to develop voluntary, consistent climate-related disclosures for companies to use in providing information to investors, lenders, and other stakeholders. The TCFD aims to bring insurers together at the table to discuss the impact of climate change on the financial sector, and the evolution of the risk in the future.
Participating in the TCFD gives us a chance to work with different people across the industry, who bring their own thoughts and expertise on this subject. Having other insurers at the round table actually helps us in identifying the areas where we need to focus. In the past year we have been addressing this topic quite aggressively. We still have some catching up to do, but we are making good progress.
Prior to joining NN, I worked in consulting for 12 years. Working for an insurer, you look at things through a different lens, which has been an interesting journey for me. I have always liked the culture at NN. It has a very dynamic environment and it has a big, complex business so there are a lot of opportunities to learn and grow.
I work with good, fun-loving people who are also very motivated. They take their career very seriously. It is a good combination for when you are trying to achieve something together as a team. I also interact with different departments and people with different viewpoints, so you always learn something. I like to work on projects with people bringing different perspectives and expertise. This way you learn from each other and provide the best solution for the business. And that’s the interesting part. I have only been here a year but if feels like I have been here for longer, which is always a good sign.
Head of Financial Risk Department, NN Non-life