HDI Global
Dr Dirk Höring, member of HDI Global’s executive board for property, engineering and marine insurance, and risk consulting, explains about the new climate risk reporting (CRR) service and its benefits for captives
What led HDI Global to develop this new service, and how does it fit into your broader strategic focus on risk management?
HDI Global developed the CRR service based on several factors, and it aligns with our broader strategic focus on risk management. Firstly, as a partner in transformation for our clients, we conducted a deep-dive into ESG topics and regulations. Additionally, we recognised the need for our clients to have access to HDI’s knowledge and expertise in the field of natural hazards. We also realised that we could fill the remaining gap in clients’ regulatory fulfilment by providing a robust physical climate risk assessment.
Many captive insurance companies are increasingly looking to incorporate climate risk analysis into their underwriting and risk management practices. How can HDI’s CRR service benefit captive owners and managers in this regard?
HDI specifically designed its service as a standalone product to help clients meet their regulatory requirements. It provides comprehensive assistance in addressing the regulatory aspects of climate risk analysis. Furthermore, the climate risk gradings offered by CRR provide invaluable insights into future climate risk developments.
This information empowers captive owners and managers to make well-informed decisions regarding underwriting and risk management, helping them effectively navigate the challenges posed by climate related risks.
Can you explain how the CRR service helps your customers meet regulatory requirements like the EU Taxonomy and the Corporate Sustainability Reporting Directive (CSRD)? What specific data and analysis does it provide?
The CRR service incorporates a comprehensive assessment of climate risk and vulnerability, a crucial element of regulatory mandates. Though clients can handle certain aspects themselves, such as water and energy usage, we present more detailed data and analysis related to climate risks. Our service provides comprehensive data on both acute and chronic climate risks, encompassing three climate scenarios and examining three points in time between now and the year 2100.
Examples of these risks include heat waves and stress, flooding, heavy precipitation, and wildfires. By using this information, our customers can meet regulatory expectations, gain deep insights into their climate risks, and effectively plan and implement appropriate response and adaptation strategies.
HDI has recently partnered with Mitiga Solutions to expand your climate data. Can you elaborate on this and how the combination of HDI’s expertise and Mitiga’s data creates a unique offering for clients?
HDI’s partnership with Mitiga Solutions allows us to enhance our climate data offerings and provide a unique value proposition to our clients. Mitiga Solutions provides scientifically based climate risk data, compiled by a team of climate scientists. This data is derived from the most recent Intergovernmental Panel on Climate Change’s (IPCC) climate models, as well as weather stations and other reliable sources. HDI leverages Mitiga’s high-quality data and combines it with our own natural hazard expertise. We interpret the data, derive risk assessments, and recommend standard mitigation measures and adaptation solutions.
By joining forces, HDI and Mitiga form a partnership that offers clients a comprehensive package. Our combination of robust climate risk data, scientific analysis, and practical risk management expertise, allows us to deliver a distinctive and tailored approach to address climate related challenges faced by our clients.
As captives seek to demonstrate their value proposition to parent companies, how can the data and insights from HDI’s CRR service help them justify their role in managing physical climate risks?
Captive insurance companies have a critical role in managing and mitigating risks, including physical climate risks which are increasingly significant. HDI’s CRR service can provide captives with essential data and insights that enhance their value proposition by demonstrating their effectiveness in identifying, managing, and mitigating these risks.
How does the CRR service support companies in their investment and location planning decisions beyond just meeting reporting requirements? What types of insights and risk forecasting does it provide?
The CRR service goes beyond meeting reporting requirements, offering significant support to companies in their investment and location planning decisions. The report includes risk gradings for nearly 30 physical climate risks, providing a comprehensive assessment of the potential risks that companies may face. This assessment is based on three IPCC climate scenarios, offering a range of future climate possibilities. Furthermore, the service provides insights for three different points in time, allowing companies to evaluate the long-term implications of climate risks for their investment and location planning. The report provides detailed and granular information when a rating of C or higher (where A represents ‘minimal risk’, and F represents ‘extreme high risk’) indicates an increased risk. This includes specific data, such as heat wave days and temperatures, flood depths, and other relevant factors. Additionally, the report suggests standard adaptation options that can help companies mitigate and manage the identified risks. By providing this comprehensive and detailed analysis, the CRR service equips companies with the necessary insights and forecasts to make informed decisions, proactively manage risks, and optimise their investment and location planning strategies.
As a leading global insurer, how does HDI’s CRR service set new standards for climate risk analysis and management in the insurance industry? What gaps in the market were you looking to fill?
One of the key gaps that HDI’s service addresses is the need for comprehensive climate risk data. We provide valuable insights into the physical risks that can emerge as a result of a changing climate. This data fills a crucial gap by offering insurers and clients a detailed understanding of the potential risks they may face. Additionally, HDI goes beyond merely providing data. We offer in-depth analysis and climate resilience consulting tailored to specific locations. This approach guarantees the provision of the most effective and suitable measures, fostering transparency and enabling businesses to make informed decisions regarding climate risk management. By fulfilling the need for data and analysis while also offering specialised consulting services, HDI ultimately bolsters the industry’s ability to address the challenges posed by climate change.
Captive insurance is often used as a risk financing mechanism for hard-to-place or specialised risks. In what ways can the CRR service support captives in identifying emerging climate-related risks that may be suitable for captive solutions?
The report offers insights into the expected future development of physical climate risks. By analysing current trends and utilising scientific climate models, it provides captives with a comprehensive understanding of the potential risks that may arise due to climate change. Furthermore, the CRR service helps captives identify the development of emerging risks, such as heat waves or droughts. This means, with the help of CRR, captives can enhance their risk management strategies by gaining deep insights into emerging climate-related risks.
Can you discuss some of the key acute and chronic physical climate risks that the service is designed to assess for client sites and operations? How granular does the analysis get in terms of parameters like, for example, water depth and wind speeds?
The CRR service is designed to assess key acute and chronic physical climate risks for client sites and operations. The service assesses nearly 30 physical climate risks. These risks are detailed in the report example as a reference for clients to better understand the scope of the assessment. In order to offer a deep analysis, the CRR service provides granular data for areas where risks are determined to have increased. This includes parameters such as water depth, wind speeds, wildfire index, heat wave days, and heat wave temperatures, among others. The service can provide projections for each climate scenarios up to the year 2100, in five-year intervals.
Regulatory requirements like the CSRD are driving captive owners to enhance their ESG reporting. How can the CRR service integrate with a captive’s overall sustainability and climate risk disclosure efforts?
First, the service fills the gap in climate risk assessments by providing a comprehensive evaluation of climate-related challenges. The service provides valuable data and insights that a captive can incorporate into their broader sustainability strategies and disclosure practices. By integrating the CRR service with a captive’s overall sustainability and climate risk disclosure efforts, companies can enhance both the efficacy and transparency of their approach to managing climate-related challenges. This integration involves aligning the data and insights from climate risk reports with broader sustainability strategies and disclosure practices.
Furthermore, integrating climate risk reporting with a captive’s sustainability and disclosure efforts helps create a robust framework that efficiently manages climate risks, while demonstrating a strong commitment to sustainable development and corporate responsibility. This integrated approach not only addresses the physical and transitional risks associated with climate change, but it also enhances the captive’s reputation and aligns with broader corporate goals.
