The report features the analysis of the carbon credit insurance market potential, projecting it to reach $1 billion by 2030 and $10-30 billion by 2050, while also addressing the challenges that must be surmounted for carbon insurance to “become the next cyber.”

It also covers Insights from leading industry experts, including interviews with brokers (Aon, Howden & Marsh) and (re)insurers (AXA XL, CFC, Chaucer & Fidelis) who highlight the promising opportunities within the market. They assert that the explosive growth of the nascent market, despite recent challenges, is a matter of “when, not if.”

Other areas covered include:

• Background on the carbon market and its role in managing and mitigating emissions and directing finance towards carbon projects, distinguishing between compliance and voluntary carbon markets.
• The four key benefits that insurance brings to the carbon markets: (1) Balancing traditional risk management practices and innovation; (2) providing a stamp of confidence; (3) conducting a detailed assessment of carbon project risk; and (4) encouraging market participants to take necessary risks.
• An overview of the current carbon credit insurance landscape, highlighting insurers who already offer products and their product suite.

The report, co-authored by specialist insurance management consultancy, Oxbow Partners, and carbon insurance company, Kita, serves as a comprehensive guide to the potential of the carbon market, providing detailed and aggregated insights for industry experts.

The report estimates the total addressable market for carbon credit insurance to be around $1 billion of annual Gross Written Premium (GWP) in 2030, rising to $10-30 billion GWP by 2050. The forecast may even underestimate the potential scale of the market; for example, the calculations are solely based on the voluntary carbon market (VCM) even though the VCM and compliance markets are expected to converge, significantly increasing the market size.

Miqdaad Versi, Head of the Sustainability Practice at Oxbow Partners, was upbeat about the potential for insurance: “The carbon credit insurance market is an exciting opportunity for those looking for an avenue to be green with integrity and make a profit. The acceleration in the market is inevitable if the world is going to decarbonise. With new capacity providers already entering in 2024, the future looks bright.” 

James Kench, Head of Insurance at Kita, said: “The insurance market is on the front line for climate risk and is uniquely placed to help business and society navigate through increasingly uncertain times. This report is a call to action for the insurance industry to embrace a vast new carbon risk pool with purpose.”