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The Impact of Climate Change and Sustainability Standards on the Insurance Market. Edition No. 1

  • Book

  • 496 Pages
  • July 2023
  • John Wiley and Sons Ltd
  • ID: 5839579
The Impact of CLIMATE CHANGE and SUSTAINABILITY STANDARDS on the INSURANCE MARKET

The book explores the role of the insurance industry in contributing and responding to the harms that climate change has brought.

This book delves into the physical and logical impacts, both direct and indirect, on the insurance industry. Subjects discussed include new technology such as big data, artificial intelligence, machine learning, the growth of sustainable economics with foreign direct investments (FDIs), trustworthiness, and ethics. Related use cases of data science for claim processing, fraud detection and prevention, policy administration, pricing, and underwriting are discussed along with cyber security issues, data protection, and big data regulatory reforms. To promote ESG sustainability, the insurance industry plays a critical and significant role. Climate-related risks are being factored into underwriting and investing strategies. Through their own operations and business activities, insurers may promote the ESG agenda and move towards sustainability. Also discussed are promoting diversity and inclusion, lowering greenhouse gas (GHG) emissions, resolving gender inequality, and helping communities through charitable work, which all improve a company’s brand, reputation, and ESG credentials.

Audience

The book is specially designed for administrators, lecturers, researchers, students of insurance and sustainability, students in financial services, insurance practitioners, actuaries, loss adjusters, underwriters, regulators, facilities management, utility companies, voluntary organizations, government departments, business leaders, policymakers, decision-makers, investors, risk managers, compliance managers, and audit managers amongst many others.

Table of Contents

Foreword xix

Preface xxiii

Part I: The Impact of Digitalisation and Lines of Insurance on Sustainable Development 1

1 Sustainability Through Digital Insurance 3
Satinder Singh, Jashandeep Singh and Shilpi Gupta

1.1 Introduction 4

1.2 Theoretical Background 6

1.2.1 Origin and Concept of Digital Insurance 6

1.2.2 The Internet of Things 6

1.2.3 Digital Ecosystem for Insurers 8

1.2.4 Digital Disruption in the Insurance Industry 9

1.3 Sustainability and Digital Insurance 10

1.3.1 Principles for Sustainable Insurance 12

1.4 Digital Insurance and Sustainable Goals 12

1.5 Findings 14

1.6 Conclusion 15

1.7 Implications 15

References 16

2 Motor Vehicle Insurance Industry in India: A Review 23
Uma Shankar Yadav, Nikhil Yadav, Ravindra Tripathi and Kiran Sood

2.1 Introduction 24

2.1.1 Why Do We Need Motor Vehicle Insurance? 24

2.1.2 Need and Significance of the Study 25

2.2 The Rationale for the Study of VMI in India 26

2.2.1 Importance of Insurance in Our Daily Life 27

2.2.2 VMI Industry and Effect of Pandemic (COVID-19) 27

2.2.3 Motor Vehicle Insurance in India 28

2.2.4 New Insurance Policy Rule in India 29

2.3 Literature Review 29

2.4 Objective 30

2.5 Methodology 30

2.6 Discussion 31

2.6.1 Motor Insurance Sales in India 31

2.7 Findings 34

2.7.1 MVA Act 2019 35

2.7.2 Benefits of VMI 36

2.8 Result 36

2.9 Conclusion 37

References 38

3 Demystifying the Prospects for Insurance Companies to Finance the Energy Metamorphosis: A Study on Indian Insurance and Sustainable Development 41
Mukul Bhatnagar, Letife Özdemir and Nitin Pathak

3.1 Introduction 42

3.2 Present Status of India in Energy Transition 43

3.3 The Prospects for Insurance Enterprises to Finance the Energy Metamorphosis 44

3.4 The Reasons Why India’s Renewable Energy Investments are Anticipated to Expand 46

3.5 Harnessing Insurance for Sustainable Development 48

3.6 Conclusion 49

References 50

4 Artificial Intelligence in the Health Insurance Sector: Sustainable or Unsustainable from the Lens of Ethical-Legal and Socio-Economic Standards 57
Yogesh Mishra and Ankita Shaw

4.1 Introduction 58

4.2 Conceptualizing Sustainable Health Insurance 60

4.3 Integration of Artificial Intelligence in Health Insurance: A Background 60

4.4 Integration of AI in Health Insurance: A Bird’s Eye View from Ethical Implications Perspective 62

4.4.1 Issue of Transparency 62

4.4.2 Issue of Accountability 63

4.4.3 Issue of Algorithmic Bias 63

4.4.4 Issue of Informed Consent 63

4.4.5 Issue of Safety and the Use of AI in the Insurance Sector 64

4.4.6 Issue of Trust Deficit Between the Insurance Providers and the Insured 64

4.4.7 The Issue of Explainability 65

4.5 Integration of AI in Health Insurance: Evaluation of Socio-Economic Repercussions 65

4.5.1 Economic Growth vis-à-vis Sustainability: Does Implementation of AI in Health Insurance Pose Unsustainability? 66

4.5.2 AI in Health Insurance: Issue of Equitability 67

4.6 Integration of AI in Health Insurance: Requirement of Ideal Model Legal Standards for India 68

4.7 Recommendations 70

4.8 Concluding Remarks 71

References 72

5 Medical Crowdfunding: From the Lens of Health Insurance 75
Shivani Inder and Rishu Bhardwaj

5.1 Introduction 75

5.2 Crowdfunding in Healthcare: Medical Crowdfunding 76

5.3 Medical Crowdfunding: Compliment to Health Insurance 78

5.4 Medical Crowdfunding: Concerns and Consequences 80

5.5 Concluding Remarks 82

References 82

6 Digital Transformation of the Insurance Industry - A Case of the Indian Insurance Sector 85
Pawan Kumar, Sanjay Taneja, Mukul and Ercan Özen

6.1 Introduction 86

6.2 Literature Review 90

6.3 Conclusion 100

References 101

Part II: The Impact of Climate Change on Insurance Markets 107

7 Climate Resilient Agriculture: Binding Agriculture Innovations and Insurance 109
Kirandeep Kaur, Jasmandeep Kaur and Ramanjeet Singh

7.1 Introduction 110

7.2 Agricultural Innovation and Trends 111

7.3 Agricultural Innovation for Agricultural Productivity 114

7.4 Agricultural Insurance and Trends 115

7.5 Agricultural Insurance and Poverty Eradication 116

7.6 Innovations within Agricultural Insurance 118

7.7 Challenges and Difficulties Associated with Agricultural Innovation 120

7.8 Barriers to Agricultural Insurance Adoption 121

7.9 Future Projection of Agricultural Innovation and Insurance 121

7.10 Conclusion 122

References 124

8 Climate Change Resilience Support in the Insurance Sector 127
Reena Malik, Jyoti Verma and Ambuj Sharma

8.1 Introduction 127

8.2 Catastrophe Insurance and Climate Change 128

8.3 Carney Defines Climate Risks 129

8.4 Heading Towards Reducing Carbon Footprints 130

8.5 Climate Change Adaptation and Mitigation: Paradigm Shift 131

8.6 Building Resilience 132

8.7 Critical Infrastructure Decarbonation and Climate Resilience Emphasis 133

8.8 Combating Challenges 135

8.9 Role of Stakeholders 136

8.10 Role of Government 136

8.11 Recommendations at Company Level 138

8.12 Recommendations at Industry Level 138

8.13 Mitigating Losses with Technology 139

8.13.1 Satellite Imagery 139

8.13.2 Location-Risk Intelligence 139

8.13.3 Adjusting Claim with AR/VR 139

8.13.4 Biometrics 140

8.14 Conclusion 140

References 140

9 Sustainable Climate Change and its Impact on the Insurance Sector 143
Amrinder Singh and Geetika Madaan

9.1 Introduction 144

9.2 Science and Politics of Climate Change 144

9.3 The Implications of Climate Change for the Insurance Sector 146

9.4 The Insurance Sector’s Present Attitudes Towards Climate Change 148

9.5 Motivations for Thinking Differently About Climate Change 149

9.5.1 Lack of Ideal Information 150

9.5.2 Lack of Long-Term Business Planning 150

9.5.3 Social Pressure from Peers 151

9.5.4 Aspects of the Institutional Structure 151

9.6 Avoiding Risks from Natural Disasters 152

9.7 The Insurance Industry’s Approach to Environmental Policy 153

9.8 Variation on a Global Scale 154

9.9 The Role of Government in Preventing Natural Disasters 155

9.10 Natural Disaster Cooperation Framework 156

9.11 Added Prospects for Insurers 158

9.11.1 Unparalleled Understanding of Potential Dangers 158

9.11.2 New Insurance Markets 159

9.11.3 Diversification 159

9.12 Concluding Remarks 160

References 161

10 A Study Regarding the Effectiveness of Environmental Education on Climate Change 165
Manju Dahiya and Naman Mishra

10.1 Introduction 166

10.2 Literature Review 167

10.3 Theoretical Concerns 168

10.4 Research Objectives 169

10.4.1 Data Analysis 169

10.5 Inference 175

10.6 Conclusion 176

References 176

11 Contribution of the Insurance Sector in Sustaining the Climate: An Analytical Study 179
Arti Gaur and Sweta Bhatti

11.1 Introduction 180

11.2 Sustainable Insurance 181

11.3 Principles for Sustainable Insurance 182

11.4 Role of Insurance Sector in Climate Change 182

11.5 Sustainability Highlights and Initiatives Taken for Climate by SBI Life 184

11.6 Energy Conservation Initiatives 184

11.7 Reduction of Carbon Footprints Plays a Vital Role in Sustaining the Climate 186

11.8 Enhancing Sustainability Through Insurance 187

11.9 Conclusion 190

References 190

12 Impact of Climate Change on Agriculture 193
Arti Gaur and Sanju Verma

Abbreviations 194

12.1 Introduction 194

12.2 Agricultural Insurance - Risk Management 196

12.3 Various Agriculture Insurance Programs 197

12.3.1 Pradhan Mantri Fasal Bima Yojana 197

12.3.2 Weather-Based Crop Insurance Plan 199

12.3.3 Coconut Palm Insurance Scheme (CPIS) 200

12.3.4 Unified Package Insurance Scheme (UPIS) 200

12.4 Crop Insurance 201

12.5 Impact of Climate Change on Agriculture 204

12.6 NICRA Assisted Farmers to Cope with Climate Variation 207

12.7 Conclusion 207

References 209

13 Climate Change: Not Only a Projection for Emerging Risks But a Reality for the Insurance Sector 211
Jyoti Verma, Reena Malik and Rachit Agarwal

13.1 Introduction 212

13.2 Impact of Climate Change on Global Insurance Industry 213

13.3 International Practice of Insurance Mechanism in Combating the Risk of Climate Change 215

13.4 Conclusion 217

References 217

14 A Systematic Review of ESG Investing and Climate Change as a Sustainable Practice in the Insurance Industry 221
Cheenu Goel, Payal Bassi and Pankaj

14.1 Introduction 222

14.2 Review of Literature 223

14.3 Research Methodology 224

14.4 Data and Network Analysis 225

14.4.1 Year-Wise Publication Details 225

14.4.2 Top 10 Journals 225

14.4.3 Network Association of Co-Authorship with Countries 227

14.4.4 Network Association of Co-Authorship with Authors 227

14.4.5 Co-Occurrence of All Keywords 228

14.4.6 Co-Occurrence of Index Keywords 229

14.4.7 Citation Analysis - Citation of Source 230

14.4.8 Author Analysis - Citation with Authors 231

14.4.9 Bibliographic Coupling of Documents 231

14.4.10 Bibliographic Coupling of Countries 232

14.5 Conclusion 233

References 234

15 SLR on Aspects of Climatic Change in the Agriculture Industry in the Context of Weather Index Insurance: Visualization Through Network Diagrams 237
Payal Bassi, Cheenu Goel and Pankaj

15.1 Introduction 238

15.2 Review of Literature 238

15.3 Research Methodology 240

15.4 Data and Network Analysis 241

15.4.1 Publications by Year 241

15.4.2 Publications by Document Type 241

15.4.3 Influential Journals 242

15.4.3.1 Top 10 Journals Based on Count 242

15.4.3.2 Alluvial Diagram Showing the Top 10

Journals Along with their Country of Origin and Impact Factor 243

15.4.4 Alluvial Visualization of Top 10 Authors Based on Citations 244

15.4.5 Alluvial Representation of Rank Score of Publications by Top 10 Authors 245

15.4.6 Network Analysis of Co-Occurrence of All Keywords 246

15.4.7 Network Analysis of Co-Citation of Cited Sources 246

15.4.8 Co-Citation with Cited Authors 247

15.5 Conclusion 248

References 249

16 Impact of Climate-Disruptive Industries on the Global Insurance and Risk Management Scenario 253
Kirandeep Kaur, Kiran Sood and Simon Grima

16.1 Introduction 254

16.1.1 Genetic and Extractive Sector 255

16.1.1.1 The Parallel Impact on Insurance Mechanism 255

16.1.1.2 The Implications in Relevance to Rising Costs and Insurance-Related Risks 256

16.1.2 Transportation Sector 256

16.1.2.1 Accountability to Climate Change and Risk Expansion 256

16.1.2.2 Exhaustive Activities Posing a Threat to the Risk-Bearing Potential of Insurance Sector 258

16.1.3 Construction Sector 258

16.1.3.1 A Challenge to the Resilience of the Property/Casualty Industry 258

16.1.3.2 A Growing Demand for the Sector Pressurizing the Existing Insurance Model 260

16.2 Objective of the Study 260

16.3 Review of Literature 260

16.4 Research Gap 262

16.5 Findings 263

16.6 Discussions and Conclusion 264

References 265

17 Examining the Antecedents and Consequences of Corporate Commitment Towards Climate Change 269
Rajni Bala and Sandeep Singh

17.1 Introduction to Climate Change 270

17.2 Literature Review 271

17.3 Antecedents of Climate Change 273

17.4 Consequences of Climate Change 273

17.5 Conclusion 274

References 275

18 Climate Change and the Insurance Sector: An Analysis of Sustainable Development in India 279
Balpreet Singh

18.1 Introduction 279

18.2 Purpose 282

18.3 Methodology 282

18.4 Findings and Discussion 283

18.5 Opportunities for Sustainable Insurance 284

18.6 Conclusion 285

References 286

Part III: The Impact of Behaviour, Culture, Education and Internal Controls 287

19 The Role of Internal Audit in Risk Management with a Perspective of Sustainability Development 289
Vinita Choudhary and Sonal Trivedi

19.1 Introduction 290

19.1.1 Role of Internal Audit in Risk Management 290

19.1.2 Purpose and Significance of the Study 291

19.1.3 Problem Statement and Research Gap 291

19.1.4 Structure of the Study 292

19.2 Literature Review 292

19.2.1 Internal Audit 292

19.2.1.1 Definition and Meaning of Internal Audit 293

19.2.1.2 The Role of Internal Audit in Any Organization 294

19.2.1.3 The Duties and Responsibilities of an Internal Auditor 295

19.2.2 Risk Management 296

19.2.2.1 Definition of Risk Management 296

19.2.2.2 Benefits of Risk Management 296

19.2.2.3 Types of Risk in Insurance Industry 297

19.2.2.4 Risk Insurance Concept 299

19.2.3 Relationship Between Internal Audit and Risk Management 299

19.2.4 The Insurance Industry in the Context of Climate Change 304

19.3 Case Discussion 307

19.3.1 Case - Internal Audit and Risk Management of General Insurance Companies in India 307

19.3.2 Discussion Question in Given Case 309

19.4 Contribution of Study 309

19.5 Conclusion 309

References 310

Website 315

20 Environment Education and Insurance Awareness - A Boon to Indian Insurance Sector 317
Sanjeev Kumar, Kunal Raheja and Ankit Dhiraj

20.1 Introduction 318

20.1.1 Effect of Climate Change on India 318

20.1.2 Costs to India’s Economy from Climate Change 321

20.2 The History of India’s Insurance Sector 323

20.2.1 Things that Changed in the History of the Indian Insurance Business were Big the Indian Insurance Scene has Slowly Changed in the Following Ways 324

20.3 Insurance Plays a Vital Role 325

20.4 School and University Teaching Environment Awareness 328

20.4.1 Best Practices Adopted by School and University 328

20.5 Different Benefits of Environment Education in Society 328

20.5.1 Imagination 328

20.5.2 Classroom Learning 329

20.5.3 Creative Thinking Skills 329

20.5.4 Learning Standards 329

20.5.5 Healthy Lifestyle 329

20.5.6 Communities 329

20.6 Teacher and Students Empowered 329

20.7 Conclusion 330

References 330

21 Cultivating Sustainable Behavior and Critical Consciousness Towards the Environment: Environmental Education for Sustainability 333
Seema Yadav

21.1 Introduction 334

21.2 Environmental Education as Concept: Promoting Sustainability 334

21.3 Environmental Education as an Approach for Addressing Environmental Problems 337

21.4 Dealing with Complexities: Changing the Scenario with Environmental Education 338

21.5 Making Students Environmental Conscious with Environmental Education 340

21.6 Teachers’ Role in Achieving the Goals of Environmental Education 341

21.7 What is Next? It is: Being Innovative in Environmental Education 342

21.8 Conclusion 345

References 346

22 Adoption of ESG by the Insurance Industry: Conceptual Framework and Future Recommendations 349
Kumar Shalender, Babita Singla and Sandhir Sharma

22.1 Introduction 349

22.2 Principles of ESG Integration in Insurance Sector 351

22.3 ESG Implementation Framework 355

22.4 Conclusion and Discussion 356

References 357

23 Sustainable Solutions for Insurance and Risk Management 359
Harret Kaur, Kiran Sood, Uma Shankar Yadav and Simon Grima

23.1 Introduction 360

23.1.1 Objectives 361

23.2 Literature Review 361

23.2.1 Research Gap 363

23.3 Research Methodology 363

23.4 Discussion 364

23.4.1 Functions of Insurance in Sustainable Development and Transfer of Risk 364

23.4.2 The Contribution of the Insurance Sector Towards Sustainable Development 365

23.5 Result and Conclusion 366

23.5.1 Recommendations and Future Scope 366

23.6 Challenges and Limitations 368

23.6.1 Various Challenges Posed Due to the Adoption of Sustainable Insurance 368

23.6.2 The Limitations of the Paper 368

References 369

24 Target 8.8: Protect Labor Rights and Promote a Safe Working Environment 373
Nikita Singla, Kiran Sood, Simon Grima and Uma Shankar Yadav

24.1 Introduction 374

24.2 Review of Literature 378

24.3 Research Methodology 384

24.4 Target 8.8 385

24.5 Conclusion 390

References 390

25 A Study on Challenges to Sustainable Development 393
Baljinder Kaur and Harreet Kaur

25.1 Introduction 393

25.2 Aim of the Research 394

25.3 Methodology 394

25.4 Discussion 395

25.5 Factors Influencing Sustainable Development 397

25.6 Challenges in Achieving SDGs 397

25.7 Conclusion 398

25.8 Suggestions 399

References 400

26 E-waste Management: A Transition Towards a Circular Economy 403
Baljinder Kaur, Kirandeep Kaur and Harreet Kaur

26.1 Introduction 403

26.2 Worldwide E-waste Structure 406

26.3 Strategic Approaches 411

26.4 DEMATEL Method 412

26.5 Assessment of Life Cycle 412

26.6 Challenges Related to E-waste Recycling 413

26.7 Conclusion 413

References 414

27 Environmental, Social, and Governance (ESG) Measures and Their Impact on Insurance Industry: A Global Perspective 417
Amrik Singh and Gaurav Bathla

27.1 Introduction 417

27.2 Literature Review 419

27.3 Trends Shaping ESG in the Insurance Sector 421

27.3.1 Strong Governance and Employee Engagement 421

27.3.2 Advances in Technology 422

27.3.3 More Accountability and Transparency 422

27.3.4 Macroeconomic 423

27.4 ESG Challenges in the Insurance Sector 423

27.4.1 Environmental Challenge 424

27.4.2 Social Challenge 424

27.4.3 Governance Challenge 425

27.5 Conclusion 425

References 426

28 Environmental Risk and Sustaining the Insurance Industry 429
Gurpreet Kaur

28.1 Introduction 430

28.2 Review of Literature 431

28.3 Literature Analysis 432

28.3.1 Findings 432

28.4 Conclusion 435

References 436

29 Global Energy Crisis: Impact on the Global Economy 439
Peterson K. Ozili and Ercan Ozen

29.1 Introduction 439

29.2 Review of Related Studies 442

29.3 Understanding the 2021-2022 Global Energy Crisis 442

29.3.1 Energy Crisis in Europe 443

29.3.2 Energy Crisis in Asia 444

29.3.3 Energy Crisis in Africa 444

29.3.4 Energy Crisis in the Middle East 444

29.3.5 The Contribution of Russian-Ukraine Conflict to the Energy Crisis 445

29.4 Methodology 445

29.5 Empirical Results 445

29.5.1 Gasoline Price: Some Data from Around the World 445

29.5.1.1 Gasoline Price in Africa 445

29.5.1.2 Gasoline Price in Europe 446

29.5.1.3 Gasoline Price in Asia 446

29.5.1.4 Gasoline Price in Middle East Countries 448

29.5.1.5 Gasoline Price in the Region of the Americas 449

29.5.2 Regional Correlation 449

29.5.3 Granger Causality Test 452

29.6 Conclusion 452

References 453

Index 455

Authors

Kiran Sood Chitkara University, Punjab, India. Simon Grima University of Malta, Msida, Malta. Peter C. Young University of St. Thomas' Opus College of Business, MN, USA. Ercan Ozen University of Usak, Turkey. Balamurugan Balusamy Shiv Nadar University, India.