Travelers names first chief sustainability officer, launches sitePosted On: Aug. 15, 2019 11:37 AM CST
The Travelers Cos. Inc. has named Yafit Cohn as its first chief sustainability officer and launched a new sustainability website, which includes its climate risk and opportunities disclosure report.
Ms. Cohn, who has served as the insurer’s associate group general counsel, will lead its environmental, social and governance efforts and serve as a member of Travelers’ ESG and disclosure committees, the insurer said in a statement Thursday.
Travelers launched a new sustainability website, which addresses 16 topics identified as the insurer’s key drivers of sustained value: business strategy and competitive advantages, capital and risk management, climate strategy, community, customer experience, data privacy and cybersecurity, disaster preparedness and response, diversity and inclusion, eco-efficient operations, ethics and values, governance, human capital management, innovation, investment management, public policy, and safety and health.
The new website includes stand-alone reports responsive to the Sustainability Accounting Standards Board standards for the insurance industry and the recommendations of the Task Force on Climate-related Financial Disclosures, according to the insurer.
The task force finalized in June 2017 a set of final recommendations to guide companies in assessing the material risks climate change poses to their operations and develop plans to mitigate these risks. The insurance industry has made progress in disclosing the impacts climate change will have on their operations but still has plenty of room for improvement, including in describing how they plan to ensure their organizations are resilient to climate risks, experts say.
Travelers identified mandates on and increased regulation of existing products and services as a short-term transition risk in the climate risks section of its disclosure report.
“For example, from time to time, states pass legislation and regulators take action that could have the effect of limiting the ability of insurers to manage catastrophe risk such as legislation prohibiting insurers from reducing exposures or withdrawing from catastrophe-prone areas or mandating that insurers participate in residual markets,” the report stated. “Increased insurance regulation in response to disasters or catastrophes may also include imposing moratoriums on policy cancellation or non-renewal for non-payment of premium, establishing further claims handling requirements or procedures, imposing additional claims data reporting requirements, establishing mediation programs for resolution of disputed claims and modifying adjuster licensing procedures for independent and public adjusters. Additionally, following catastrophes, there are sometimes legislative and administrative initiatives and court decisions that seek to expand insurance coverage for catastrophe claims beyond the original intent of the policies or seek to prevent the enforcement of the policy terms, including the application of deductibles. Costs associated with these risks vary depending on the specific action taken and are often hard to predict, but they could be significant. For example, participation in residual market mechanisms has at times resulted in and could in the future result in significant losses or assessments to insurers, including Travelers.”
Travelers identified increased revenue through demand for green building/LEED certification designations and demand for energy efficient, renewable and/or clean technology as short-term opportunities in the climate opportunities section of its report.
The insurer evaluates the findings of government reports such as the Fourth National Climate Assessment released last year, but catastrophe modeling is “critical” to the insurer’s strategy of incorporating weather and climate variability into its underwriting and pricing decisions, Travelers said in the report. For example, the insurer estimates that there is a 1% chance that its loss from a single U.S. and Canadian hurricane in a one-year timeframe would equal or exceed $1.6 billion, or 7% of the company’s common equity as of Dec. 31, 2018.
“It is important to note that there are no industry-standard methodologies or assumptions for projecting catastrophe exposure,” the insurer stated. “Accordingly, catastrophe estimates provided by different insurers may not be comparable.”
In July, American International Group Inc. created the position of chief sustainability officer and issued its first report on climate risks and opportunities under the task force recommendations.