SNCF Group: What are the biggest challenges insurers face with climate change?

Pascal Demurger: The biggest risk is that we won’t be able to do our job! Climate change is such a massive phenomenon that it threatens our ability to provide coverage for people and businesses over the long term. Costs are skyrocketing. In France alone, claims reached a record €11 billion in 2022. And more and more regions are being affected. For example, we already know that half of all single-family homes will be vulnerable to drought. This makes the insurance business a good bellwether of how climate change is accelerating and how urgently we need to adjust course to adapt to a new reality.

SNCF Group: How is the insurance industry responding?

P.D.: Put simply, insurers have two options. We can stop providing coverage in high-risk regions, which would leave people who live there unable to insure their property. Or we can pool risks among insurers to distribute costs and maintain climate solidarity so everyone is covered. For now, France has stuck with risk pooling, but that clearly requires a spirit of cooperation. Beyond that, we need to step up preventative measures to reduce everyone’s exposure to climate risks. Right now our prevention efforts and the resources we’re devoting to them are simply inadequate.

SNCF Group: How does MAIF factor climate change into its insurance strategy and investment decisions?

P.D.: We take a three-pronged approach: mitigate, adapt and restore. Mitigation means reducing greenhouse gas emissions. MAIF has over €20 billion in assets under management, which means our investment strategy is one of the most effective ways we can reduce our climate footprint. Since the 2010s, we’ve followed a responsible investment policy focused on climate, biodiversity and social issues. In practical terms, this means we no longer invest in oil or coal, and we allocate 15% of our assets to projects that directly support the green transition. We also encourage our policyholders to make positive changes, for instance by offering lower premiums for electric vehicles and promoting car part reuse in repairs. Adaptation is just as important. We have a new website, Aux Alentours, where clients can assess their home’s climate risks and learn how to adapt. And for our most vulnerable policyholders, we help pay for home inspections and renovations to improve resilience.  

Lastly, we want to restore what’s been lost so that nature can more effectively do its job of protecting us from the effects of climate change. That’s why we created our eco-dividend. Every year, 10% of our earnings go toward biodiversity restoration projects—rewilding rivers, restoring wetlands, protecting sand dunes—to help mitigate flooding and erosion. 

SNCF Group: Climate adaptation is costly—is it worth it?    

P.D.: Absolutely. On a societal level, the numbers speak for themselves. In late 2023, France’s agency for ecological transition, Ademe, estimated that if we do nothing, climate change will cost €260 billion per year between now and 2100. By contrast, the Pisani-Ferry/Mahfouz report¹ found that transitioning to a greener economy would cost €66 billion per year between now and 2030. In short, inaction costs more than action.        
Businesses that fail to adapt run a huge risk. They’ll struggle to keep up with shifting trends in many industries, and increase their exposure to transition risk. They’ll also be damaging their employer brand and exposing themselves to tighter regulatory scrutiny. Conversely, business models that do factor in these new challenges are proving they can thrive and stay resilient. That’s the philosophy behind Mouvement Impact France, the network I co-chair, alongside members like SNCF, to champion a business model that’s both successful and sustainable.