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    Addressing climate change: Insights from New Zealand’s insurance companies
    (2024) Mendoza, Mary Gay; Otago Polytechnic | Te Pūkenga
    Climate change triggers extreme weather events globally, challenging the insurance industry’s climate risk management efforts. In New Zealand, the insurance sector is on the brink of financial instability due to the recent upswing in the frequency and severity of natural disasters. As these risks escalate, insurers must urgently address these challenges by reducing their exposure, devising new strategies, and implementing new business models to secure a climate-resilient and sustainable future. This exploratory research delves into the response of the New Zealand insurance industry to these challenges, examining and evaluating their adoption of climate-related risk strategies by using primary and secondary data content analysis. The primary data included 16 interviews with agents, employees, experts, and policyholders. The secondary data included annual and sustainability reports published by New Zealand insurance companies in the last three years (2021-2023). This research utilises the three dimensions of the Dynamic Capability Framework: Sensing, Seizing and Transforming capabilities as the guiding framework for the content analysis. The three themes were renamed to suit this research: Future-focused Risk Assessment and Sensing, Sustainable Innovation and Seizing Opportunities, and Strengthening Adaptability through Transformational Change. A comparative analysis of the primary and secondary data findings enabled redefinition and re-conceptualisation of codes and themes, improving the findings' trustworthiness. The findings unravelled the motivators, such as financial losses, reputational risks, operational perils, and compliance with regulations, compelling insurance companies to have effective climate risk management plans. There are also challenges that insurers face while mitigating climate change, which include data limitations and regulatory ambiguity, yet opportunities for innovation and market differentiation emerge. In addition, findings also revealed differences between local and multinational companies’ implementation of climate strategies and practices. Local companies are focused on how they can respond to their customers now, while multinational companies are focused on their long-term approach. Overall, the findings address the three research questions regarding New Zealand insurance companies' responses to climate change, highlighting their proactive strategies and adaptation measures in a dynamic environment. This research contributes significantly to the literature, shedding light on how New Zealand insurance companies respond to climate change. It underscores the strategic approach of adopting a Dynamic Capability Framework to gain a competitive edge while navigating the complexities of climate change. It strengthens the alignment of New Zealand insurance companies’ climate-mitigating practices, demonstrating their ability to create favourable business impacts in the face of climate change challenges.