InsuResilience in conversation with: Claudia Thyme, Director Emerging Markets Development, AXA XL
When public infrastructure assets are severely damaged or destroyed by a natural disaster – particularly in developing and emerging markets – it can often have a significant impact on a country’s economy. This is why building, managing, and maintaining infrastructure is one of Governments’ most fundamental responsibilities.
The insurance industry is ready to play a greater role and contribute its vast technical capabilities to help national and subnational governments increase their resilience to climate risk. This requires private-public collaboration, through organizations like the IDF and InsuResilience, to drive greater insurance demand where it is needed most so that countries can continue to grow and prosper.
Which role does infrastructure play for social, economic and financial resilience in climate-vulnerable countries?
“Building, managing, and maintaining infrastructure is one of governments’ most fundamental responsibilities, as these assets play a vital role in the activities of a country’s citizens and businesses. If these are severely damaged or destroyed by a natural disaster, it can have a significant impact on a country’s economy.”
Think about energy installations, roads and bridges, schools and universities, hospitals, airports and other transport terminals. If these are destroyed, producers may not be able to transport their goods to the market, or where exporters need them. Businesses are unable to function without power; young people’s education may be interrupted even for several years – and of course, there can be loss of life if people cannot get to hospitals or these are destroyed. The social and economic impact of damage or destruction of public infrastructure can be significant.
How can the insurance industry help in building and maintaining resilient infrastructure?
“The industry has a vast knowledge pool, expertise and technical competence on how to de-risk infrastructure assets, so it can play a much broader and impactful role in this area than as just as a source of funding. We have experts who can provide advice on issues from ‘what is a safer location’ to ‘what measures can be taken to make infrastructure more resilient’. The private sector and many governments make use of these capabilities frequently, but many more national and subnational governments could use insurance to help build up resilience. It is important for all of us to help raise awareness about the capabilities this industry can contribute to make infrastructure more resilient to climate risks.”
What are ways in which the government can engage with the insurance industry to transfer infrastructure-related climate and disaster risks?
“The best way for governments to engage with insurers and reinsurers is through direct dialogue. We find this is important and helpful for both sides, as it helps us understand a government’s needs and respond appropriately to their specific needs.”
The (re)insurance industry is part of a broader ecosystem of private and public organizations working together to advance societal interests. The Insurance Development Forum (IDF), through its Sovereign and Humanitarian Solutions Working Group (SHS), is committed to support the development of a portfolio of new insurance solutions for sovereigns, sub-sovereigns, humanitarian and civil society actors, collaborating between the IDF industry members and in partnership with the InsuResilience Solutions Fund, the Centre for Disaster Protection and other partners. Moreover, infrastructure is a key focus for this work.
The IDF will release a practical guide to insuring public assets later this year. Concisely, what does this guide aim at, and what are its main elements?
“It aims to help national and sub-national governments to more easily access the benefits of insurance for public assets by giving them some fundamental knowledge and guiding them through the process of setting up an insurance programme. This can be a somewhat complex process, and the government might not have the experience to do this on their own. The guide helps them address questions like: Why does it make sense to consider insurance? What are the up-front considerations? What data is needed? Who are the stakeholders involved?”
Its main elements include:
- The rationale for insuring public assets
- The various factors that need to be considered, understood and decided upon at the outset of the process for the effort to go forward and to be implemented successfully.
- The institutional, legal and operational issues associated with setting up and managing the programme.
- The specific information/data that is needed to insure an asset; this is a critical element and not to be under-estimated.
- The various insurance structures that can be used and how its components, such as limits and retentions, affect the insured.
- Examples from around the world on how different countries are using insurance to protect their public infrastructure assets and promote resilience.
Which information and capacities (skills) do governments require to set up a sustainable Public Asset Insurance Programme (PAIP)?
“Setting up an insurance program is a broad effort, and it involves many stakeholders. It requires a wide range of capabilities.”
First, information or data on their infrastructure assets is a fundamental element for governments to obtain insurance cover at a reasonable price. The more an insurer knows about the infrastructure, the more likely it is that it will be comfortable providing insurance cover. Second, information about the risks: what risks have those public assets faced in the past; what can be expected, etc.
In terms of capabilities, because we recommend that governments pool their assets together and insure them as a portfolio and this represents a somewhat challenging undertaking, a broad range of capabilities is required. These include legal/ regulatory expertise to make sure the necessary framework is in place to enable the set-up of a PAIP; financial skills; procurement and project management expertise – and of course an understanding of how insurance works.
What way forward would you like to see in this area? Which key points would you like readers of the guide to take away?
“ Increasing countries’ resilience to climate change is an urgent priority and the re/insurance industry is ready to contribute its broad capabilities to help achieve this goal. Broader use of insurance requires engagement also from the public sector, through organizations like the IDF, InsuResilience and others, to drive awareness and demand in the countries that need this protection the most to make their economies more sustainable . When countries can stay on the path of growth, progress development and become more resilient, that is positive for all sides. Insuring public assets is part of the way forward.”
Public infrastructure is critical for the economic and social development of countries, and the IDF represents a channel that groups together tremendous resources from the reinsurance and insurance industry, so we encourage governments to contact us so that we can work together.
Background on Claudia V. Thyme
VP, Director Emerging Markets Development
AXA XL, a division of AXA
In the role of Director Emerging Markets Development, Ms. Thyme explores and executes opportunities that increase resilience and drive continued growth in emerging markets, by driving (re)insurance penetration. For business development she has a particular focus on Latin America.
Ms. Thyme has more than twenty years’ experience in the insurance industry, 11 of those with AXA XL. Prior to taking on her current role, she held the position of Director Strategy & Business Groups, Communications & Marketing. Before joining XL, Ms. Thyme held different senior communications and marketing roles at Zurich Insurance during ten years.
While leading global teams and acting as advisor to global and regional business leaders, Ms. Thyme successfully formulated and executed strategies to drive business development and market penetration. She has broad experience working with both mature and emerging re/insurance markets, including Africa, Asia and Latin America. At AXA XL, Ms. Thyme is also a Diversity & Inclusion sponsor, member of the Global CSR Committee and Chair of the EMEA CSR Committee.
Ms. Thyme started her career as a communications and marketing consultant, advising companies across different industries on change management strategies. She holds a BA from Georgetown University, Washington D.C. and an MBA from City University London Business School. She is based in Zurich, Switzerland.
This interview was conducted by InsuResilience Secretariat