In December 2022, a landmark agreement was reached when over 180 countries adopted the Global Biodiversity Framework during COP15 in Montreal. This initiative aims to reverse the alarming trend of global biodiversity decline, which has significant implications for various sectors, including insurance.
The insurance industry, pivotal in managing financial risks and providing recovery solutions for natural disasters, is acutely affected by the ongoing loss of nature and the impacts of climate change. With more than half of the global economy—valued at approximately $44 trillion—dependent on healthy ecosystems, the stakes are high.
In Australia, the situation is particularly dire. The Insurance Council of Australia (ICA) has reported that 10 out of 18 ecosystems in the country are at risk of collapse, posing substantial threats to biodiversity and ecosystem stability over the coming decade.
Recognising this urgent crisis, governments and financial institutions worldwide are increasingly advocating for the restoration of natural ecosystems. The ICA underscores that Australian insurers must adapt to this emerging reality by integrating nature-positive considerations into their underwriting and investment strategies.
Internationally, the adoption of nature-based solutions is proving effective in helping insurers mitigate risks related to climate change, safeguarding insured assets in the process. Australian insurers are uniquely positioned to implement these practices, addressing the pressing challenges associated with both climate change and nature loss.
As the next decade presents a critical opportunity for action, the ICA encourages Australian insurers to take proactive measures—even in the absence of fully established regulatory frameworks—to facilitate a transition toward a more resilient and nature-positive future.
