As global warming threatens our future, Ping An is deploying technology and business acumen to turn risk into hope and opportunity.
When Typhoon Mangkhut tore through South China in 2018, millions of families, businesses and ecosystems were left at the mercy of its destructive power. Killer storms such as Mangkhut are central to why the World Economic Forum consistently puts climate-related threats at the top of its Global Risks Report – and every year the disasters mount.
It’s humanity’s collective responsibility to develop solutions to turn the tide, while protecting communities from climate-spawned calamities. China is taking leadership by making climate change mitigation a national priority, enshrining its vision of “ecological civilisation” into the constitution, and promoting solutions such as solar energy and the sharing economy.
If the global ESG community tends to focus on G (governance), China’s strategies are dominated by E (environment). There’s powerful motivation: climate-derived events account for 95 per cent of China’s losses from natural disasters. Today China is the world’s biggest investor in renewable energy and largest issuer of green bonds.
For Ping An – a Chinese insurer that has evolved into a diversified financial group – climate risk reaches into every aspect of its business model. Climate-driven disasters threaten agricultural production, water resources, energy generation, major projects, social and economic development – all critical areas in the insurance sector.
Ping An is developing its business under the belief that technology is one of the most powerful tools for overcoming humanity’s greatest threat. Ping An Brain, a comprehensive AI platform, lies at the heart of its vision of achieving a quantum leap in climate risk management and green development. It’s a belief underpinned by concrete action and measurable results.
Riding the storm with digital solutions
As Mangkhut threatened landfall in Guangdong province, Ping An was there to help hundreds of businesses and communities in the afflicted zone. Its Digital Risk System (DRS) – an AI-driven platform for physical risk identification, analysis and management – kicked into action as the storm churned relentlessly over the South China Sea.
Ping An’s Digital Risk System maps Typhoon Manghut’s trajectory against client assets to enable AI-driven risk management guidance.
The system’s unique value? Integrating 1.4 billion data points leveraging Ping An Brain’s competitive AI edge, and expertise in geography, disaster science and meteorology. The results were dramatic. DRS identified over 8,000 customers in the landing area; sent over 13,000 disaster SMS warnings; and conducted on-site risk investigations for roughly 400 enterprises and construction projects. DRS was thus instrumental to helping clients minimise losses. Ping An’s pre-emptive risk control systems have cumulatively saved customers more than RMB2 billion (US$28 million) between 2015-2018.
DRS is a flagship initiative in Ping An’s overall ethos of mitigating climate risk and pursuing climate opportunities that protect the planet. As its actions during Typhoon Mangkhut demonstrated, Ping An is committed to partnerships, not just contracts, with the customers it serves. By incorporating ESG factors in digital solutions from insurance to fin-tech and healthcare, Ping An seeks to lay foundations for a win-win relationship with all stakeholders.
Personalised climate solutions
Ping An believes imaginative climate solutions that also grow business to be a powerful force of good. To that end, it places a strong focus on analysing both transition risk – such as regulatory change and tech disruption – and physical risk – such as droughts and extreme weather events.
One way it pursues the strategy of growth-through-good is by developing innovative niche insurance products. The approach requires granular parsing of data, made feasible only by advanced AI capabilities. In risk management, one size rarely fits all. That’s why Ping An’s product offerings range from “oyster farming wind index insurance” (for bivalve harvesters in Shangdong province) to “fiscal tea tree low temperature index insurance” (for tea cultivators in Sichuan province.)
DRS is a key tool in Ping An’s precision risk-management arsenal, rating risk for five common crops and nine types of natural disasters. Yet the story doesn’t stop there. The group’s high-tech risk assessment tools include satellite remote sensing, advanced drones, Internet of Things and location-based services (LBS) positioning.
Ping An Vision, for example, is a unique Ping An Brain solution that deploys remote sensing to enable real-time analysis of damage caused by natural disasters such as earthquakes, floods and typhoons – bolstering the risk control capabilities of Ping An and its customers.
In an agricultural scenario, Ping An Vision offers timely insights for government and insurance customers with its powerful real-time growth sensing and crop loss assessment features. Below is the result of wheat recognition using AI remote sensing technology in Linshu County, Shandong, China, showing the area of cultivated land, crop planting and growth to inform insurance underwriting and claim assessments.
The result of wheat recognition in Linshu Country, Shandong, China.
Through cutting-edge tech, Ping An’s profitable niche insurance products align with social and economic interests, promoting green, inclusive development in society. Individualised care for vulnerable business owners is one important way Ping An commits to implementing the Principles for Sustainable Insurance (PSI) of the United Nations Environment Program Finance Initiative (UNEP FI).
Pressure points for positive change
As Ping An erects bulwarks against disaster, it also promotes green business practices through an array of pressure points. These include stringent requirements and conditions for insuring businesses that pollute; integrating ESG factors in investment and lending; and engagement in shareholder activism – notably through its membership in Climate 100,+ a global responsible investor initiative.
For example,Ping An’s Statement on Low Carbon Business Policy progressively tightens environmental underwriting requirements for coal-fired industries. The group assesses the climate impact of all prospective underwriting projects according to specific criteria, including project location, pollution control, management ability, technology expertise and environmental-protection standards.
Meanwhile, Ping An limits its investments in high carbon emissions industries with Climate 100+ imperatives. It targets reduction of coal-related industry investment by 30 per cent by 2030, benchmarking 2015 as the reference year.
The counterpart to screening out polluters? Proactive support for businesses with exemplary environmental practices and innovation excellence. This ranges from developing insurance products that reward environmental stewardship, to investment and financing for promising green technology startups.
On the investment side, each Ping An member company strengthens support for low-carbon innovation through numerous financial instruments, including equity and fixed-income investment products. On the lending side, Ping An Bank supports green industries with its environmental loan programme. Sectors include clean energy, electric vehicles, environmental services, energy-efficiency technology and green construction.
In 2019, Ping An Bank had granted a total of RMB59.1 billion (US$8.4 billion) in green credits with a loan balance of RMB24.3 billion (US$3.4 billion) at the end of the year. The bank supports its green credit strategy with a robust credit approval and compliance protocol, including green banking development goals and a veto system for green loans.
Ping An is only at the beginning of its green innovation journey. High-intensity R&D keeps it a step ahead in AI climate solutions, whilst an ever-evolving product range meets customer needs in real-time – at the dizzying pace of climate permutations.
Through innovation and a spirit of global cooperation, Ping An’s mission is defined by a long-term pledge: to underwrite a bright future for tomorrow’s generations.
Produced by the commercial department of the Financial Times