Sustainability Report 2021 02.1 Sustainability in insurance 01 Introduction 02.1.3 Natural disasters Read more about how we are managing Assessing natural catastrophe risk We also continue to enhance our geoinformation Natural disasters – including the risks of a changing climate in section Experts at Allianz Reinsurance (Allianz system (GIS) tools. This enables us to deepen our 02 Measuring and 02.1.2 under the heading ‘Caring for the Re) include meteorologists, hydrologists, understanding based on the exact geolocation managing sustainability earthquakes, fires, floods and storms – climate vulnerable’. geophysicists, geographers and mathematicians. of a customer’s house or a company’s production Sustainability in our business activities can devastate communities and recovery Together, they model around 50 natural site. For floods, a peril which is expected to be 02.1 Sustainability in insurance can take years. Allianz has expertise in Increasing resilience for our catastrophe (Nat Cat) Nat Cat scenarios for the impacted most by climate change, the difference 02.2 Sustainability in insuring both individuals and businesses customers and society Group using data captured according to best- of a few meters can have a big impact on the risk proprietary investments The primary role of the insurance sector is to in-class standards. Applying their risk expertise profile of a location. 02.3 Sustainability in asset management against these perils and risks. We are absorb strong financial impacts that would to the Allianz portfolio with its insured values, The latest developments add vital capabilities to Sustainability in our organization constantly improving our tools to identify otherwise overwhelm the capabilities of private our experts assess overall exposure to Nat Cat our applications, such as enabling underwriters 02.4 Human resources and manage risks and support our and commercial clients. In doing so, we provide risks. Vendor and in-house applications provide a to access detailed risk scores by individual Nat 02.5 Customer satisfaction customers when the worst happens. stability to societies and economies by ensuring comprehensive risk profile of any defined location Cat peril for every location globally. We have also 02.6 Environmental management businesses can be re-started quickly and people which can be used as the basis for effective risk generated a method to describe and evaluate Socio-economic shifts, global interdependencies can re-build their homes following a catastrophe. management measures. This is also used to climate change-driven adjustments in natural 03 Strengthening and climate change all play a role in the We also advise clients on risk preventive develop risk-based pricing for Nat Cat perils and hazard and flood risk. Our next step is to assess our foundation changing extent of weather-related insurance measures to minimize their risks – both to to provide portfolio managers with insight into risks from other perils and integrate these into our losses. According to the World Economic Forum’s reduce potential financial impacts and to keep local and regional accumulation of risks. decision-making processes (see section 4.5.2). 04 Climate-related 1, two of the top financial disclosure (WEF) Global Risk Report 2021 businesses operational. Allianz Re is constantly improving Cat Risk five global risks are linked to environmental To scale our positive impact, we research and Management at Group and local levels. In 2021, 05 Our universal principles disasters and extreme weather. In the short-term analyze the risk situation for all natural perils we made substantial progress in establishing the (0–2 years), extreme weather events rank third in all countries where we operate. We offer Catastrophe Target Architecture. This includes in the list of critical risks threatening the world. this knowledge to policymakers to support the Allianz Modelling Platform, which will host Climate action failure is identified as the most sustainable development and shape resilience all internally developed Nat Cat risk models. impactful and second most likely long-term risk. measures. Climate change is a critical factor we Through a standardized framework and process The losses associated with natural disasters must account for as an insurer and by sharing automation, the platform enables us to leverage 2 have increased 15-fold in recent decades, our expertise to support resilience. For example, our catastrophe claims history and our view of implying high risk and volatility for the insurance we develop projects under the umbrella of risk, for example to incorporate an estimation of 3 industry. The Allianz Risk Barometer 2021 InsuResilience on behalf of the Insurance potential climate change impacts. places natural catastrophes sixth in its ranking Development Forum (see section 02.1.2). of global business risks. Economic losses were Find out more in section 02.1.2 under the estimated to total around $80bn of global heading ‘Caring for the climate vulnerable’. insured losses in 2020, up more than 40 percent from 2019. 65 percent of losses caused by natural catastrophes over the past decade were 4 uninsured as the protection gap widened. 1 https://www3.weforum.org/docs/WEF_The_Global_Risks_Report_2021.pdf 2 Source: Swiss Re Sigma Explorer. 3 https://www.agcs.allianz.com/content/dam/onemarketing/agcs/agcs/reports/Allianz-Risk-Barometer-2021.pdf 4 Source: sigma 1/2021, Swiss Re Institute. 20