Canadian Underwriter

Insurers adapting to climate change risks, but could do more: Ceres report

April 6, 2009   by Canadian Underwriter

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Despite outlining 643 insurance-related activities addressing climate change in the United States and abroad, the U.S. national investor coalition Ceres says the response of insurance companies to climate change still doesn’t match the urgency of the risks associated with the issue.
Ceres is a U.S. coalition of investors and environmental groups that commissioned the report, From Risk to Opportunity: Insurer Responses to Climate Change.
“Insurers are integrating global warming concerns into many products and services — from green home [insurance] and pay-as-you-drive auto insurance for consumers, to renewable energy insurance for companies riding the clean energy wave,” said Ceres president Mindy S. Lubber.
“Still, the scope and breadth of the insurer response fails to match the scale and urgency of the risks — or the opportunities — facing the industry.”
Ceres does recognize that “a vanguard of insurers is taking bold steps to adapt their business model to the realities of climate change.”
The report, available at, catalogues more than 600 innovative products and services offered by more than 244 insurers, reinsurers, brokers and insurance organizations in 29 countries.
The initiatives include:
•    coverage for renewable energy providers faced with less-than-anticipated solar, wind or geothermal energy production;
•    incorporating climate change considerations to liability insurance for directors and officers, a development that recognizes pending and prospective lawsuits could mean significant extra costs to major corporate emitters of greenhouse gases;
•    auto offerings such as pay-as-you-drive (PAYD) insurance, fuel-efficient/low-emission vehicle incentives and premium discounts for hybrid vehicles;
•    a marine insurance product that offers a premium discount up to 10% for hybrid-electric boats and yachts;
•    green-building products and services designed for new green buildings, and upgrades to traditional existing buildings to achieve “green” status, either following a loss or in the course of normal renovations;
•    products to manage diverse risks from carbon capture and storage (CCS); and
•    participation in carbon markets, which now include carbon trading, insurance for credit risks, political risks, plus advisory services and through carbon-neutral products.