Unespa is urging the Government to establish a dialogue to consolidate the Compensation Consortium, the instrument for dealing with exceptional compensation, at a crucial moment in which firms have already had to pay 400 million for atmospheric phenomena. The listed Direct Line explains its strategy in this matter.
The year of the Great Pandemic – a term coined at the IMF to refer to the global synchronized recession that generated the Covid-19 health crisis – was not only the exercise of the hibernation of economies. It also brought with it another exceptional phenomenon, in Spain, related to the weather: the storm Filomena. From the employer’s association of the insurance sector, Unespa, it is assumed that the component of natural damage is already an irreversible reality; of course, for its different lines of business. In his latest annual report he explains that “Extreme phenomena caused by climate change have an ever greater impact on society” and that, in this sense, insurance, which acts as a protector against these events, with compensation and reparation of damagesYou cannot remain on the sidelines of a challenging reality. In which the companies in the sector have already disbursed 400 million euros for atmospheric phenomena. Just for Filomena, the bill amounted to 230 million, amount in which the damage to buildings and vehicles is calculated. “The insurance had to carry out 198,000 actions due to the snowfall” They say in Unespa, based on estimates made with data sent by 29 multi-peril insurers (with a joint market share of 82%) and 15 automobile companies (70% share).
The main component of this payment corresponds to snow damage to buildings, highlighted in the employer’s study.
Pilar González de Frutos, president of Unespa, influenced the importance of the weather in the insurance business in a recent interview with Social Investor, in which, despite assuring that Spanish companies “they will maintain their solvency with the increase of climatic risks ”, sIt boasts of the incorporation of “new risks” associated with environmental catastrophes that will require “adequate calibration”. Methodology being developed by the European Insurance and Retirement Pensions Authority (Eiopa). “We will see if the formula is left as is or modified.” Although Unespa bets on the current yardstick for measuring capital requirements, because it has shown that it “works”. In the same way that it rejects changes in environmental measurements: “the standard formula for catastrophic risks is subdivided by country”, so in the deliberations within Eiopa “we have always alluded to the fact that in Spain we have a specific solution for coverage of the damaging effects of climate change ”through“ the intervention of the Insurance Compensation Consortium ”.
González de Frutos recalls that, in this sense, he points out that the rThe risk of storms was already reviewed in 2018 and the mitigating effect of the Consortium was taken into consideration, and that hail was already considered in Solvency II. In the same way as in the drought variables, in the case of the primary sector, they are already covered by Agroseguro. In the opinion of the president of the employer’s association, what has changed is the perception of clients regarding coverage for catastrophes. “It is one of the aspects where customers are going to notice the changes, in the dissemination of information on sustainability.” Since March, “we have already included them in the marketing of savings products, in pension plans, in investment funds.” Specifically, in the product categories that promote environmental characteristics and in the sustainable investment category. Although it emphasizes that, “from the financial industry, we are asking the regulators to create a single point of sustainable information so that it is there where we can go to find that information.” As well as the collaboration of the national regulator. “We have asked the General Directorate of Insurance to help us in the establishment of criteria and to clear up all the doubts that exist in the companies to comply with the Disclosure Regulations.”
Insurance represents 5.1% of Spanish GDP, calculates Unespa. In this context, Línea Directa reveals the keys to this period of reflection in the sector and the transition to climatological calculation scales.
Insurance Direct Line. Its Finance Director, Carlos Rodríguez Ugarte, recognizes that climate change directly affects the insurance sector, which is why “at Línea Directa we have been not only adapting for years, but also leading insurance solutions to this impact.” The Environmental awareness and restrictions on the most polluting vehicles are two of the factors that have led to a new mobility paradigm in which the most efficient cars prevail and there is a boom in new formulations for use and ownership, such as sharing, and Personal Mobility Vehicles (VMP) such as scooters and electric bicycles. In 2016 -explains- “we began to market a specific insurance for electric cars, the Respira Policy, which has a market share of 14% in new sales.” And last year “we launched Call it X, the first policy with a car included for a fixed price per month, which is an alternative to buying at a time of uncertainty about restrictions on certain engines.” Finally – he clarifies – “last September we launched Vivaz Safe & GO, the first pay-per-use insurance for VMP that covers the person and is activated and deactivated on the way”.
Regarding home insurance, “every year we see a recurring loss rate derived from atmospheric phenomena such as DANA that are linked to climate change.” It is true that its occurrence is something difficult to predict, but we consider that its incidence is something that has come to stay And, as a company, we have been taking them into account for a long time when drawing up our budgets each year.
As a company, “we also have a role and a responsibility in the fight against climate change”, highlights Rodríguez Ugarte. Línea Directa has had a three-year Sustainability Plan with well-defined objectives in environmental matters for ten years, so that we have committed to being neutral in carbon emissions by 2030.
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