More and more researchers are seeing red when it comes to the environment. Over the last 100 years, average global temperatures have risen 1 degree Celsius. Worldwide, climate change is getting a lot of attention. According to surveys, in Germany alone nearly 70 percent of the population sees their future threatened by climate change, especially from natural catastrophes. And this is no misconception: Whereas weather-linked insurance losses averaged of 5 billion dollars a year in the 1970s and 1980s for Allianz, that figure had increased to over 40 billion dollars in 2010, partly due to climate change.
Driving for green
However, climate change is not the only issue affecting insurance business strategy. The global shift in thinking about energy is putting a much bigger emphasis on renewable energies. This presents insurers with enormous opportunities. Allianz considers renewable energies to be a proper growth market and thus supports this area as an investor, insurer, risk consultant and fund manager.
Allianz doing its part
Allianz is taking action. Back in 2005, it introduced a comprehensive climate protection strategy to tackle the challenges of climate change for its business and its customers. For this, Allianz drew on its many years of experience as an insurer and risk manager and developed financial products and services that enable the company to take an active role in climate protection and the shift in energy policy.
Center of excellence for climate change
Responding to the growing importance of climate change, Allianz established Allianz Climate Solutions in 2007. The wholly-owned subsidiary supports the positioning of Allianz SE in climate questions. ACS thus acts primarily as a service provider for insurance solutions, risk and investment management and consulting. Today, Allianz Climate Solutions is a leading insurance broker for renewable energies, servicing both external customers and Allianz units as a center of excellence for all climate-protection related matters. Allianz Climate Solutions Investment Management puts its emphasis on CO2 investments for Allianz SE. Even though it is not required to, in 2012 Allianz is becoming 100 percent climate-neutral by balancing its C02 emissions with investments in CO2 projects.
According to scientists from the U.S. Agriculture Department's Forest Service, tropical mangrove trees store even more carbon than rainforests
Protecting the climate as investment strategy
As part of the direct private equity activities of Allianz, Allianz Specialised Investments puts its focus on renewable energies as an investment segment. Investments in wind and solar energy offer ideal conditions for the Allianz strategy for investing insurance premiums: manageable risks, attractive returns and durations of up to 20 years. Since it was founded in 2005, the ACP subsidiary has put around 1.3 billion euros into this growth market and is one of the largest financial investors in this area worldwide. The Allianz portfolio currently carries 34 wind farms and 7 solar farms in France, Germany and Italy. Together they generate over 700 megawatts of electricity, enough for 350,000 European households.
The Allianz portfolio currently carries 34 wind farms and 7 solar farms in France, Germany and Italy (image source: Google)
Storm-proof for climate change
Allianz Global Corporate & Speciality (AGCS) insures companies with annual revenues of 500 million euros or more. It covers projects in renewable energies all over the world. Because wind and solar parks are taking on ever larger dimensions, their risks are increasing as well. Allianz was one of the first global insurers to react to these challenges with tailor-made insurance products for the renewable energy sector. For offshore wind parks, for example, AGCS insures every phase of the project, from turbine production to on-line operation.
Allianz is already active as an insurer of offshore wind parks
Insurance from A to Z
Local Allianz units like Allianz Deutschland also support climate protection and the shift in energy. Allianz Deutschland is currently the lead insurer of the largest construction project in the North Sea, the 400-megawatt wind farm BARD offshore 1. But insurance solutions in renewables at Allianz Deutschland encompass a much broader spectrum: insurance protection begins with the installation of small photovoltaic panels on the roofs of private homes and ends with onshore wind and solar parks. In addition, feeding privately generated electricity into the public power grid is becoming more and more important for households and companies; Allianz Deutschland also covers them in case of damage for loss of revenues due to an interruption in operation.
Incentives to save energy
Several Allianz units worldwide also offer what is called "green building insurance". First pioneered by Fireman's Fund, the Allianz subsidiary in the US, this kind of insurance covers office buildings or the facilities of business customers that were built or retrofitted to be more energy efficient. Some policies also include payments for post-damage modifications when rebuilding in order to make the buildings more ecologically friendly in the future.
Green growth at Allianz
But what opportunities and risks do renewable energies actually present? And what do the experts say about the business with wind and sun? There are more stories to follow.
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