Jean-Paul Conoscente, CEO of Scor Global P&C

In the first episode of our new podcast, Jean-Paul Conoscente, the CEO of Scor Global P&C, joins Meg Green, the managing editor of Insider Engage, for an exclusive interview.

In this episode, Meg and Jean-Paul cover climate change in depth – looking at its impact on the insurance industry on both sides of the balance sheet,  the role that insurers have to play in fighting it, and how they can help mitigate its impact on everyday lives. 

Jean-Paul also reflects on his route into insurance, and what has kept him in the sector over the last three decades. 

Transcript

The insurance industry is the backbone of the economy. It's the reason we're able to take risks.

And it's the force that helps put us all back together when disaster strikes. So in this podcast, I'll be spending some quality time with key CEOs to ask them how certain world events can impact the insurance industry and how the insurance industry is impacting the world.

We'll also be talking about how they rose to the CSU. It seems like no one grows up year for an
insurance career, but here we are. I'm Meg Green, managing editor of the online insurance
magazine, insider engage. And this is CEO perspectives.

The major hurricane bearing down now on the us making landfall this evening, hurricane Delta, this is the 10th name storm to hit the us this season alone. That's an all time record days of heavy rains of drowned out these villages on the ground. Tens of thousands of people here in Malawi have been affected many now.


Italy has declared a state of emergency as millions grapple with the worst drought in the country. In 70 years, thousands of people in the Western United States are spending the weekend in evacuation centers as wildfires continue to burn across the region. The death toll from the recent floods in the south African province.

Of Zulu natal has risen to 49 and many others are missing after days of torrential. Rain
authorities say it's the worst flooding in decades and experts are linking the storms to climate
change over the last 30 years, natural disasters worldwide have tripled. The frequency and intensity of droughts, floods, wildfires, and hurricanes is now at its highest peak that combined with shifting populations has put more people at greater risk for facing natural catastrophes, property and casualty insurers and reinsurers face this risk from both sides of their balance sheet.

They underwrite homes, businesses that can be damaged or destroyed by extreme weather
events. Plus have traditionally provided insurance to large fossil fuel producers. On the
investment side, insurers are facing pressure to avoid investing in fossil fuels in favor of
supporting more green technologies.

So what does the future hold for the insurance industry? And how is the industry planning on
taking a role to fight climate change? Joining us from Paris today to share his insight on this
issue is John Paul Conant, the CEO of score group PNC.

John, Paul, thank you so much for taking the time to speak with us today. Oh, you're welcome.
Meg. Now, are you in Paris right now? I am in Paris. Yes. Do you, you have dual citizenship. Is
that right? I do. Yeah. I was born in, born in the us and grew up, uh, my childhood in France and
I lived about half my life in France, half my life in the us.

And you have an interesting background. You didn't study insurance right off the bat, did you?
No, I didn't. I uh, Stumbled into insurance reinsurance. I started out, um, studying earthquake
engineering, then worked as an earthquake engineer in California. Uh, after my studies and the company I was working for started in the, uh, the nineties, uh, modeling, uh, risk for insurance companies.

There was the, uh, the start of cap modeling. There was an opportunity for me to move back to
Europe and go into cap modeling, but I knew nothing about the insurance reinsurance really.
And. And that's how I, I started in the industry and then I went from cab modeling to, uh, being a broker to being a reser.

So that's, that's a bit my journey in the industry. What did, what did you like about insurance?
What drew you in? I liked the, the techn the technical aspect of it. I also liked the commercial
aspect of it. Uh, and reinsurance it's about forging long term, um, relationships. It's a small
industry as well. So you get to know everyone in the industry very quickly.

And, uh, I. It's an industry. That's always looking at new topics, new new subjects. And, and so
it's, it's very innovative in terms of the material, uh, that we, that we look at. So, uh, John fall,
you've been in the industry in the insurance industry for a long time. Uh, how did you get
interested or really involved in the climate change aspect?

From a personal standpoint, as well as, as we, uh, as we discussed, my background comes
from, uh, earthquake engineering. So I've been involved in the modeling of, of, uh, natural
catastrophes ever since I graduated. And so climate change, uh, is a big driver, uh, in my view
of many of these, of theses. And so I find it, uh, intellectually. Challenging. It's a topic we've been looking at as far as I can tell, you know, since the eighties and nineties.

 And I, I think a lot of the predictions we had made back in the nineties were
actually seeing them today in 2020. So it's, you know, I think there's a, a real driver from a, a
technical and, uh, intellectual perspective.

So score has been a leader among insurers in climate change. Uh, you've uh, participated in the UN global compact in 2003. And we're a founding member of the principles for sustainable insurance in 2012 and the net zero insurance Alliance last year. So what role do you see insurers playing in fighting climate change?

I think insurers have a, have a key role to play in the fight for climate change, especially, uh, on
the, on the PNC side from, from by background, uh, we're experts in, in climate risk. And so I, I
think we can contribute to, to help with a better understanding. Not necessarily of the
meteorological, you know, aspects, but more the impact on, uh, on people's everyday lives.
As insurers. We also exposed to climate change on the business side, uh, every day, both on
the physical risk aspect, as well as a transition risk. When it comes to expected revenues from,
uh, fossil energies, for example. And I think also the insurers can benefit or contribute to
opportunities linked to transition, you know, being greed business on, on an underwriting or, or on the investment side.

Looking at new solutions to help clients transition to different, uh, sources of energy, supporting, uh, new, new sources of energy, uh, through insurance reinsurance, uh, and, and fostering new ideas. And so I, I think insurers have a, a key role to play investing in solutions for climate risk
adaptation and, and contributing to the transition of the economy to, uh, to a low carbon
economy.
Uh, insurance, you know, is a key facilitator for. For the economy. And I think without insurance, uh, this transition would not be possible. Do you think the insurance industry is doing enough? I think insurers, you know, already do a lot. I, I think we can probably do more. We already did a lot of work, uh, as a company trying to assess the carbon footprint of our investment portfolio.

And it's been a lot of work done over the past, uh, few years, you know, coming out of Europe.
But, uh, more, more globally. I think through the net zero insurance Alliance, we're trying to
replicate the same approach on the insurance side. It it's a bit more complicated than the
investment side, but I, I, I think there, once we have a better sense of, uh, being able to
measure the corporate footprint of our portfolio, I think it would be much, uh, Easier and, and
probably faster to start working on the improvement of the carbon footprint as well.
Another way that we can contribute is probably through more partnerships with governments as well. I mean, right now, you know, governments are, are taking an approach. That's very regulatory driven. But then pushing most of the responsibility back on individual companies or individual, uh, segments like the insurance industry through, you know, combined partnership,
uh, private, uh, public.

We, we probably can achieve a lot more, a lot faster, uh, than the current approach. And I think the insurance industry has, has a role to play there. On the underwriting side. Uh, could we explore a little bit, how score is addressing ensuring fossil fuel producers? First as a reminder score was, was one of the, the first companies to exit the insurance of new coal mines, uh, and
plant projects since 2017.
And, and also we committed to PHAs out, uh, unabated coal plants. By 2030 in the, uh, O E C D countries. And by 2040, uh, worldwide, you know, as, as you mentioned, we're also founder of some of the key, um, associations, uh, on the insurance side, looking at helping us get to, uh, a net zero by 2050. I think the new measures were taken, uh, on the insurance side, um, that we announce is no new coverage, uh, new coverage of new oil field productions.

From 2023, uh, and the ambition to double the, the coverage for, uh, low carbon energy by
2025. I, I think this, you know, there's a lot of focus, uh, on, on exiting segments that are viewed as contributing negatively to, uh, to climate change. I, I think we probably don't talk enough. Uh, To some of the positive projects or contributions we can make to ensure, uh, that the economy, you know, adjusts to, to this transition and, and to foster a, a transition other than just excluding risk.

So we're, we're engaging with our clients and partners to, to use a transition and see how we
can help them, uh, in this, uh, energy transition. We also worked on a number. Projects trying to,
uh, for example, see how we can through insurance use some of the negative carbon, uh, all
for, for, um, forestry and sell, you know, through the selling of, of, uh, negative CO2, provide
income to, uh, forestry owners and help some of the industries that are, that contribute to, to
CO2 emissions to offset this.
Do you see, and, and not to go back to dwell on the negative. Aspect, but do you see that
expanding to, to reduce coverage for industries that rely a lot on fossil fuels? Yes. I would
expect, um, these restrictions to, to expand gradually to, uh, large users of fossil fuels, but I
think it will be very much dependent on, uh, on geography, uh, relative to, to the timing.
So in countries, like in, in, in Europe or the us where there's, there's a selection of alternative,
uh, sources of energy, I'd say probably the, uh, the pressure will be, uh, greater in the near, near
term to, to add restrictions to large users. I think in other geographies, you know, taking Africa or
India as examples, Where fossil fuel remains a, a very big component of the, um, energy use for
the economy.
You know, the restrictions, there will probably be, uh, more in the medium to long term because
first the economies have to transition to alternative, uh, fuels. Uh, before you can start excluding
in a large chunk of the economy. And as you said, insurers, uh, are impacted by climate change,
both on both on the underwriting and the investment side.
Can you tell us about score and how you've looked at your investments to try to reduce, uh,
investments in fossil fuels? Yeah. Yeah. So scores is non invest in companies with more than
10% of revenues for most of the non-conventional fossil fuel energies, nor in oil and gas
producers. Currently investments in companies with non-conventional fuels, uh, activities
represents 0.8% of our corporate bond book.
Uh, and we've also committed to reduced by 27%, uh, the carbon intensity of our corporate
bonds equities portfolio by the end of 2024, uh, comparing this to the end of 2019. And we're
very much on track to deliver this, this commitment. We also intend to double the investments in green social and sustainable bonds by the end of 2024, as compared to the end of 2020 and start to engage on deforestation with the same investees through collaborative initiatives. So we're very much focused on, uh, on making sure that we're attaining all our sustainable, uh, investment goals by 2024. So looking at the impact of climate change, impacting the frequency and severity of natural catastrophes. Can you tell us how you're changing your book of business? Yes, we, we believe climate change has been, uh, one of the, uh, main causes of, of the large cat.

Uh, activity we've seen really since 2017, 18, and as a result, you know, using models that use a historical record to try to predict the, uh, frequency and severity. Uh, we, we think it's, it's time to
adapt this. We, we ourselves have done a lot of, uh, studies. To try to predict not what the
impact would be in the next 20 to 30 years, but what would be the impact over the next five
years?
And so from a SciTech form point of view, this is very challenging, uh, as, uh, from, you know,
meteorology is sort of a, a longer term, um, Science looking at, uh, decades instead of years,
but from a business point of view, I, you know, we need to look at years and, and not decades.
So our conclusion is that, uh, there is a significant rise of, of, of frequency, of climate sensitive,
uh, risks.
And right now we, we don't see. We don't believe there's, there's, there's enough evidence to,
um, change our views on the severity of our models that we use to, to predict, uh, sort of, uh,
maximum losses for, for different risks. So we've adapted our portfolio to kind of, uh, reduce our
exposure to frequency, uh, or, uh, in the cases where we're we still provide coverage,
significantly increase the prices, uh, to match the risk.
So it's, it's more a question of, um, rate adequacy, uh, for the, for the perceived risk and, and
there, depending on the market, depending on the, on the per our perception of risk, uh, you
know, is not always aligned with the client's view or the market's view. so when the, when it's
not aligned, we sort of reposition our capacity, uh, higher up on the programs on a more
non-proportional basis or a view of risk is aligned with the market view that would provide
capacity, uh, more across the board.

Do you think there are areas of the world that are becoming uninsurable? I don't think anything is uncurable. I, I think the, the, the real question is are the, the risk owners willing to pay the
price or the perceived price of the risk? You know, I think a good example is Florida where were already, uh, home insurance for example, is a very expensive, you know, do I personally believe that the rates are adequate?

The answer is no, are people who are already paying. Hundreds of thousands of dollars in
insurance, uh, to ensure their homes willing to pay a lot more? Uh, probably not. So I, I think
that's when the, the question of, uh, uninsurable, uh, insurability comes into play is when the risk owners don't have the same perception of risk.

And are not willing to pay the price of the risk in those cases, you know, either the markets go
uninsured or the government steps in and tries to provide a solution, uh, which is basically, uh,
not risk based, but, uh, economically based, for example, um, you know, helping homeowners
or policy holders, uh, afford insurance or provide the equivalent of cheap insurance, uh, through
governor needs or, or other measures.
So looking out over the reinsurance industry today, how would you describe the market? I, I, I
think it's, it's a, it's a positive market overall. I think the last, uh, you know, it's been a difficult run for the, uh, reinsurance market in general, with five years of, you know, uh, poor performance
globally, mainly driven by cat COVID hall, didn't help, but, uh, cat was a big driver of the poor
results.
I think as a result, there's been very strong market reaction, you know, not necessarily in all, all
segments in all areas, but, uh, a return to, uh, the need for technical profitability has really been
a big driver over the last, uh, I'd say five to, to 10 years for the industry. So I think it remained
very.
Positive on the industry. In general, the question comes more as a company. Do we feel the,
you know, the, uh, the return for the capital required is adequate in all segments. And they're,
uh, probably more reserved on the, on the climate, you know, on the climate sensitive cap, for
example, where we feel that despite the significant price increases, we probably need a lot more
to get back to, um, to a rate adequacy.
There's other lines of business, you know, we, we see. You know, for example, Marine, uh,
credit UR, uh, engineering lines of business that I've been stressed by, you know, by poor
performance in the past, there's been a lot of capacity, uh, withdrawn from those lines of
business. Uh, a lot of remediation as a market done to those lines of business.
And so today they're in a, a state that's, uh, fairly attractive. So I think there's still, you know,
also as an industry risk is our, uh, met Poya is our, is our, uh, resources on which we, we build.
And I, I think there's more and more risk. Uh, the risk universe is expanding. And so, you know,
cyber is one that's emerged over the last, uh, 10, 15 years.
You know, there's a lot new risks emerging every day for which, uh, there's no insurance
currently and where insurance and reinsurance, uh, can provide the new solutions. So I think as
an industry, you know, we will never run out of risk, uh, to cover. Uh it's. I think that's, that's an
exciting perspective that, you know, we can help the economy, uh, as the economy in our lives
change to more technology, you know, different ways of, uh, Evolv.
Insurance and reinsurance will, will remain an important development, uh, support for, for this
evolution. What do you see as the biggest challenge facing the industry today? The biggest
challenge is, is being able to respond, uh, To the population's need for more and more
coverage. I think as a, as a society, the risk aversion is, is very high society doesn't wanna
retain risk anymore and is looking naturally to in the insurance industry to take on more and
more risk.
And I think our challenge is, is to understand all these different, new risk emerging, uh, and be
able to quantify, uh, the risk and make sure we get the appropriate product and pricing for, for
these new emerging risk. How do you see the industry continuing to evolve going forward? We'll probably become, um, much more client-centric than it is today.
I, I think that's a need when you talk about challenges, that's probably one of the challenges as
well. Um, more client-centricity and, uh, Adapting our, our products, our services, our, our
company structures to being more client-centric. And that goes for insurance as well as
reinsurers. In my point of view, I think another challenge we face is probably generational
staffing of the companies, where the industry tends to be typically a lot of, uh, gray hair people.
Uh, with not, not a lot of, uh, training programs bringing, uh, kind of younger generations. And I
think over the next five to 10 years, that will be an issue for the industry. And so we have also
also make the, the, the work attractive to the younger generation. And I think, you know, the
client centricity is in my view, one way of making it more attractive because it will involve
technology.
It will involve a different way of looking. Uh, how to address customer's needs, you know, from
that perspective, uh, you know, we will be as attractive to some of the, the workforce and other
industries, John Paul, if there was one thing you could change about the insurance industry,
what would it be? um, I think, uh, what I would, uh, like to change is, is probably, uh, public
perception as an industry, both from a customer point of view, as well as from a potential, uh,
employee point of view, insurance is not very sexy and is often viewed as.
Not the bad guy, but as an industry that is not associated with the financial industry in general
and view more as a, uh, sort of brick and mortar industry. The reality is very in my view is very
different. You know, when we look at the changes in the industry over the last 10 years, it's been
tremendous.
And I think the next 10 years will be even faster. So I, I think, uh, our, the public. Perception of
the industry is, is the one thing I would change. And what's your favorite thing about the
insurance industry? I'm always challenged when I, I think I, I know everything about the
insurance industry than I, I discovered is a lot more, uh, for me to learn.
I think also, as I mentioned before, I, I think the. It's an industry, uh, especially on the
reinsurance side, that's, uh, fairly small and we tend to, to build very close ties with our, our
partners or our clients, and even sometimes our competitors. And I think as an industry, that's,
uh, very rich and, and one of the things I, I liked about this industry, that's great jump Paul.
In this episode, I learned how John Paul's engineer. Help to draw him into the world of insurance
and how he sees insurers as a shock absorber to help cushion the blow of climate change
losses. It's also fascinating to see how insurers can influence reducing greenhouse gases by
leveraging both their underwriting and investments.
If you've enjoyed this episode, please tell your friends and subscribe to CEO perspectives,
wherever you get your podcasts and look forward to next month. When we share a dynamic
discussion with another industry leader. For more information on climate change and insurance, please visit our website insider engage.com.
Thanks to John Paul Kant for sharing his story with us today. Our producer Lindsay Riley at
earshot strategies for making us sound good. And my year money colleague, Celine frost and
Karim for their help and support.