Insurers and climate change

April 24, 2012

Story I did for Yale e360 about the insurance industry and climate change:

Insurers are central to how we deal, or don’t deal, with climate change. They price the risk facing property owners, and others, from weather events — effectively sending a signal to the rest of the economy about how seriously to take the threat. And with $23 trillion in global investments, insurers are also systemically important. If these companies fail to properly account for the risks they face from climate change, they could become financially vulnerable, with serious repercussions for the global economy.

As the Ceres report puts it: “With the world still reeling from the devastating impacts of an economic crisis triggered by hidden risks in the banking sector, we can ill afford a new problem triggered by hidden risks in another.”

The report revealed a growing divide between U.S insurers and their European counterparts, who have been some of the strongest business advocates for taking action to slow global warming. European insurance executives also have been critical of the U.S industry for not being more proactive.

“It is frustrating to see that it’s so extremely difficult to include this huge risk of climate change into current business,” says Andreas Spiegel, senior climate change adviser at Swiss Re, a large reinsurance company. “There is a bit of a short-term view on the benefits, risks, and costs.”

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1 klem April 25, 2012 at 4:25 pm

What huge risk? The US insurance industry writes $120 billion a year in premiums alone. I’ll bet the entire insurance industry GDP is worth a half trillion dollars a year. The risk of climate change might be a few billion a year, its peanuts. Besides, our insurance industry can assess their own risks, who cares what the worryworts in the EU think.

2 timicom April 25, 2012 at 4:37 pm

Klem – Thanks for commenting. I don’t think anyone would argue that the US industry can assess its own risks. But why not do it? If the Europeans are overreacting, why not prove it? Ben

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