September 1, 2011 by Canadian Underwriter
Only 11 of 88 major U.S. insurers surveyed recently have formal policies in place to deal with growing climate change risks, according to a new report issued by Ceres.
The report was to have been delivered at a conference of the National Association of Insurance Commissioners (NAIC) that was cancelled due to Hurricane Irene.
The report, Climate Risk Disclosure by Insurers: Evaluating Insurer Responses to the NAIC Climate Disclosure Survey, analyzes what 88 leading U.S. insurers are saying about climate change in public filings with state insurance commissioners – and the extent to which they’re factoring it into their business models.
“The findings are both illuminating and disillusioning,” Ceres president Mindy Lubber writes in the report’s foreword. “While the survey revealed a broad consensus among insurers that climate change will have an effect on extreme weather events, few insurers were able to articulate a coherent plan to manage the risks and opportunities associated with climate change.”
California insurance commissioner Dave Jones, who co-chairs the NAIC’s climate change task force, says “climate change is an obvious physical threat to us all, but increasingly it also poses a serious financial threat to the insurance industry, with the very real potential of negatively impacting consumers’ ability to purchase affordable insurance.”
Some of the largest players in the industry – particularly in property and reinsurance – are investing considerable resources in understanding the risks and developing strategies that may drive more climate-resilient underwriting practices and capital decisions, the report says.
But the survey also reveals that smaller players, which represent a large percentage of the industry, are doing little. “Of particular concern to regulators, the most vulnerable companies tend to be within the market segments that are closest to consumers,” says a press release from Ceres, announcing the report.
Ceres is a national coalition of major investors, environmental organizations and other public interest groups working with companies to address sustainability challenges such as global climate change and water scarcity.