The Insurance Council of Australia (ICA) has released a roadmap for insurers to meet emissions reduction targets and says it will advocate on behalf of members and their customers for policy settings that accelerate Australia’s transition to net zero.

The roadmap, launched at the ICA annual conference in Sydney today, outlines pathways for insurers to achieve net zero emissions for their operations by 2030 and across underwriting, claims supply chains and investment decisions by no later than 2050.

“Insurance is a foundational component of the Australian economy with billions of dollars invested in industries globally, and coverage of millions of Australian homes, businesses and assets,” ICA CEO Andrew Hall said.

“This roadmap will play a critical role in enabling our industry to do our part in reducing emissions and achieving the goals of a net zero economy.”

ICA says it will work to support the sector’s alignment with the roadmap’s goals and will publish an annual update to track the progress of insurers against the report’s recommendations.

The Climate Change Roadmap Towards a Net Zero and Resilient future report, authored by Boston Consulting Group for ICA, draws on consultations with the $60 billion sector over the past 12 months.

ICA says insurers have been strongly advocating for action to better protect against extreme weather risk, and the roadmap will place them “at the vanguard” of the financial services sector when it comes to acting on the cause, not just the impacts, of worsening weather.

Mr Hall says reinsurers, investors, regulators and customers increasingly expect insurers to play a role in the transition to net-zero, improve transparency around insurance-associated emissions and demonstrate they understand and are managing climate risk.

“This action will need to be matched by governments, including through setting strong national emissions reduction targets and implementing a comprehensive set of policies to decarbonise key sectors,” he said.

Measures insurers can take in their own operations include investing in energy efficiency, rooftop solar for office buildings and transitioning corporate fleets to electric.

On underwriting, ICA highlights global work on a measurement and disclosure standard being developed by the UN-backed Net-Zero Insurance Alliance (NZIA) and the Partnership for Carbon Accounting Financials, as well as work by other alliances that can assist underwriters in developing strategies.

ICA says it will join the NZIA and actively participate in alliances, and encourages members to consider joining as well. It says insurers can look at exploring innovative products and services to help households and businesses lower emissions and strengthen underwriting capabilities in low-carbon activities.

The report says that as the insurance industry changes underwriting practices to tackle climate change, the ICA must ensure Australia’s transition is fair and equitable.

“Investment in transitional technologies like retrofitting buildings, rooftop solar, or electric vehicles can impose a financial burden on disadvantaged households and businesses,” it says.

“Similarly, the industry should continue to provide essential underwriting services, including workers’ compensation and fire and indemnity cover, ensuring insurers continue to play their role to keep all Australians safe.”

As the economy moves towards net-zero, portfolios will organically trend in that direction, but the report says that to accelerate the transition and reduce the gap to zero, business levers will still need to be applied.

A number of individual insurance companies released statements in support of the roadmap.

“We are pleased to see the release of the Insurance Industry’s Climate Change Roadmap by the ICA,” QBE Australia Pacific CEO Sue Houghton said. “The insurance sector has an important role to play in fostering an orderly and inclusive transition to a net-zero economy.”