AIA Group's Chief Executive Officer, Tan Hak Leh, discusses how climate change and its risks can impact the Life & Health insurance sector.
I'm Hak Leh, I'm the Regional Chief Executive Officer of AIA Group, and I've been in the Life and Health insurance industry for more than 30 years
What are some of the ways in which climate risk has impacted the life and health insurance sector?
Climate change is the defining issue of our time. The direct financial impact of climate change on life and health industry has been somewhat moderate so far, we are keenly aware of the potential disastrous consequences that worsening climate change can cause our industry.
So far, we are encouraged by the increasing awareness and appreciation of climate risk, and multitude of initiatives being championed by various stakeholders. We are seeing strong traction in embracing net zero commitment by many industry players.
And there is also a strong shift away from carbon-based exposure and greater allocation to green energy projects. Operationally, companies are proactively reducing their carbon foot print. And business wise, we are seeing intensified collaboration across all players, to assess consequences of climate on mortality, morbidity, hospitalisation. And of course, a lot more needs to be done to prepare our industry for worsening climate.
What are some challenges and opportunities that life and health insurers are facing given the growing impacts of climate change?
Key challenges will be how to underwrite, price and manage mortality and morbidity risk, as well as medical expense exposure under worsening climate conditions.
There is strong evidence that extreme heat will lead to higher mortality and morbidity rates. Likewise worsening air pollution and higher frequency and intensity of climate related disasters will have a strong toll on death, accidents and illnesses. Of course, all these could exponentially increase the risk exposure to life and health industry.
In terms of opportunities, it's difficult to think of an opportunity out of the threat of an extreme climate. But I guess extreme climate could increase the awareness and appreciation of having adequate insurance protection for ourselves and our families.
How can GAIP support AIA in addressing these challenges and opportunities?
As a tripartite partnership between the industry, regulators and academia, GAIP can help in 2 very significant ways:
- Capitalise on its research capability to analyse the risk and develop innovative insurance solutions. And
- Through its policy think-tank, help develop a robust and conducive regulator framework for us to deal with this defining issue of our time.
