Insurance Information

It is becoming apparent that insurers are attempting to adapt their business models to issues relating to climate change. Still additional work is needed on the increase in environmental liabilities. This is according to a report by the Boston-based Ceres investor coalition.
The report entitled “From Risk to Opportunity: Insurer Responses to Climate Change 2008,” deals with 643 climate-related activities that were put in place by 244 insurers from 29 countries over the past year to cope with growing exposures that are resulting from climate change. Ceres says that there has been a move among insurers to embrace a more complicated approach to climate change, but adds that as far as product development, services and coverage is concerned, the industry is still in its infancy.

Ceres states that in many ways, insurers are still trying to catch up with their customers, who are rapidly adjusting the way that they design products, construct buildings, and produce energy in response to climate change.

The reports author Evan Mills, who is a scientist at the U.S. Department of Energy's Lawrence Berkeley National Laboratory, says that in the manner in which they are providing their offerings of auto, homeowner and commercial coverage, products and services, it is clear that property and casualty insurers are dictating much of the industry's climate change-related activity. The report which was released in on April 2nd states that there are commercial offerings being in included in coverage for wind and solar power production shortfalls. Offerings are also being made of storage insurance, premium discounts for energy-efficient building renovations, and discounts for carbon capture.
On the other hand, the report states that life and health insurers, are far behind other insurance segments, saying that in such insurance segments as offshore property, aviation and ocean marine, there has been little to no activity.

Forty percent of all climate change-related activities are linked with European insurers accounts, while U.S. insurers reflect 37% of such accounts. The remaining 23% of changes are carried out by Asian and Australian insurers. This includes promoting loss prevention, and crafting innovative insurance products, along with the building of awareness for climate change activities and public policy participation, and making knows carbon risks.

Also mentioned by the report is the participation of U.S. insurance brokerages which have demonstrated significant leadership in bringing about climate change insurance initiatives.

Mindy S. Lubber, Ceres president complains that the scope and breadth of insurer response still fails to match the scale of urgency of the risks and the opportunities that are facing the industry. He says that insurers’ attention to climate change is extremely important in as much as the insurance industry under girds every aspect of the economy and has the ability to transform the global energy system into to one that is clearly cleaner and greatly more sustainable.