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Insuring against climate change: An interview with Brian O’Neill, Head of Communications, Sponsorship, Sustainability at Aviva Ireland

By David Monaghan

02 January 2025

Climate change is one of the most pressing issues of our time. How can insurance companies who have traditionally provided financial protection against accident or injury prepare themselves for a worsening climate in which such incidents occur more frequently? Brian O’Neill, Head of Communications, Sponsorship, Sustainability at Aviva Ireland sits down with David Monaghan to discuss this, and more.

This article was originally published in Business & Finance magazine vol. 60, annual review 2024. To read the latest issue, click here.

In October 2024, Florida, America’s ‘Sunshine State’, was hit by a powerful Category 3 storm that reached winds of 120mph. ‘Hurricane Milton’, as it was dubbed, left numerous homes destroyed and millions without power.

Milton descended on the west coast of the U.S. less than two weeks after Hurricane Helene, another severe tropical cyclone, had devastated Florida’s ‘Big Bend’ region.

In Ireland, in the very same month, Storm Ashley landed with aplomb, causing coastal flooding, displacement of loose objects, fallen trees, and dangerous driving conditions.

Severe weather incidents are becoming more and more frequent as a result of human-induced climate change, one of the most pressing issues of our time.

Businesses have their part to play in mitigating the effects of climate change, and Environmental, Social, Governance (ESG) measurements provide a specific set of criteria that companies can measure, benchmark and report against to help offset their impact on the environment.

But how can insurance companies who have traditionally provided financial protection against accident or injury prepare themselves for a worsening climate in which such incidents occur more frequently?

Brian O’Neill is the Head of Communications, Sponsorship, Sustainability at Aviva Ireland, a significant insurance player in the Irish financial services market that focuses on pensions, investments, savings, as well as general insurance on cars, homes and commercial properties.

He sat down with Business & Finance to discuss how insurers are preparing for a more volatile climate.

Weather events

Climate researchers linked to World Weather Attribution (WWA), a group that includes Ireland’s Met Éireann, have found that heavy storm downpours which lead to devastating flooding were 10 times more likely and 20 percent more intense across Ireland and the UK between last October and March.

The intense rainfall from storms seen in the 2023-2024 season occurred approximately once every 50 years in Ireland’s pre-industrial climate, the group said.

This increase has negatively impacted people’s welfare, the cost of living, and food production.

Aviva looks at flooding very carefully as a general insurer, O’Neill says. It is a key risk factor in determining a claim.

“But now we’re seeing severe rainstorms where you get monthly average rain in one day.”

Traditionally, providing property insurance is about safeguarding against something that is unlikely to happen. However, if properties are located in areas of continual flooding, then it becomes difficult for insurers to offer flood insurance.

Says O’Neill: “If somebody’s house gets flooded every year, then one can’t expect an insurance company to keep accepting the risk … Ultimately, the insurance company has to ensure that the premiums it’s got coming in are at least equal to or more than the claims that are going out.”

So what is Aviva doing? “We are working with the government, and we are working with county councils to try and ensure that remedial works are put in place.”

Part of Aviva’s guidance to the government has been to suggest that, in Ireland, too many properties are built in floodplains or areas which are prone to flooding: “And that’s something that our planning process has got to be more vigilant about – managing where they live,” O’Neill says.

Sustainability

O’Neill acknowledges that Aviva has a role to play in transitioning to a more sustainable model for living.

“In terms of environment,” O’Neill says, “we’ve been carbon neutral since 2010, and now we’re on a journey to become net zero by 2040.”

How does Aviva exert influence over development in the area of sustainability?

“We exclude things like oil production and mining – we don’t invest in those … unless they agree that they are going to sign up to reduce the carbon intensity of their business.

“Our investment managers would use constructive influence at AGMs and through engaging with those sort of stockholders, but by also essentially saying, ‘Look, we’re not going to invest in you if you continue to be a high emitter of fossil fuels through your business.”

Similarly, Aviva will not insure you if you are involved in those aforementioned industries and are unwilling to move to carbon reduction, he says.

Insuring Electric Vehicles

The Government of Ireland’s national target, under the Climate Action Plan, is to have up to 30% of the country’s vehicle fleet electrified by 2030. That’s 845,000 electric vehicles on the road by the end of 2030.

As of July 2024, there are 69,891 private, taxed electric cars. Combined with hybrid electric vehicles that figure rises to 128,317. The country is currently on course to undershoot its goal.

Aviva is, famously, a car insurer. “The government can’t hit that target unless we insure those vehicles,” O’Neill says.

“If we were to turn around and say, ‘Oh, we don’t like EVs’, then the government would have a problem, because if you can’t insure vehicles, you’re not going to be able to sell them, and you’re not going to be able to put them on the road.”

What makes insuring an electric vehicle more difficult than a standard vehicle is that the cars are simply different, structurally: “You need to be able to source parts for EV. Some of the makes, and manufacturers are not as well established as as you say your Mercedes and Ford and your Toyotas.

“Some of those cars present new challenges for us in terms of they’re silent. They are very quick too, some of those cars.

Aviva is committed to increasing the share of electric vehicles, O’Neill says.

O’Neill acknowledges that there are still metals and other materials in an electric vehicle which are not sustainable.

“We have a problem with junkyards being full of old vehicles that are difficult to get rid of, so that’s a global problem. How can we ensure disposal of vehicles sustainably? How can we ensure vehicles potentially have a longer shelf life such that they don’t have to be replaced as quickly.”

CSRD

The Corporate Sustainability Reporting Directive (CSRD) is a new obligatory EU-wide regulation whereby companies must disclose their climate and environmental data. It essentially requires companies to make clear where they are on their ESG journey.

Aviva will issue its first CSRD report in 2026, based on its 2025 performance.

“We’ve got some work to do”, O’Neill says.

The requirements are onerous in terms of the expectations, he says: The carbon footprint of your total operation, what you are doing to reduce it, what your longer term plans are to help your business prepare for a different environment.

“And of course, it’s broader than just climate,” he adds. CSRD also tracks and measures a company’s people policies. Organisations are now asked about the composition of their workforce, and how people of diverse backgrounds are represented across the organisation.

“We have more work to do to reduce the gender pay gap,” O’Neill says.

He continues: “We want people to be able to bring the best version of themselves to work, regardless of their race, their age, their sexual orientation, whether they’re on the spectrum or not on the spectrum … We want them to feel that this is a place where they can work, where they can progress, that they can feel safe and can fulfil their ambitions.”

CSRD is not an end in itself, O’Neill says. “It’s a report card.”

“It’s managing both the social requirement, the sustainability requirement, and doing so in a way that ensures that your business can remain profitable, viable, and meet your shareholder requirement as well as your wider stakeholder and societal requirement.”

It’s also a measure to help combat greenwashing, O’Neill says – the idea that companies discuss green policies in public but do not enact them in practice. “Talking the talk, but not walking the walk”, says O’Neill.

“Regulators and governments across the globe are making sure that companies report and do so in a structured way, and in a regulated way, and that’s very important … With something like CSRD where you’ve got an audit requirement

“This ensures that anything you’re putting into this report is going to be approved by your auditors as well as internal governance.”