Report: Insurers Not Ready for Climate Change

by | Sep 2, 2011

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Despite broad consensus among major insurers that climate change will affect extreme weather events, only an eighth of such companies have formal policies in place to deal with growing climate change risks, according to a report issued today by business sustainability coalition Ceres.

The new report, Climate Risk Disclosure by Insurers: Evaluating Insurer Responses to the NAIC Climate Disclosure Survey (pdf) 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 global warming into their business models. Only 11 of the insurers surveyed have climate change policies in place.

Ceres says the report is the first attempt to analyze responses by insurers to a mandatory 2010 survey. The disclosures were filed with insurance regulators in six states: New York, New Jersey, California, Oregon, Pennsylvania and Washington.

Climate change is altering the industry’s global business landscape and threatens to undercut the risk models on which it depends, according to the report. The study was to have been delivered today at a conference of the National Association of Insurance Commissioners, but the meeting was cancelled due to Hurricane Irene.

According to the National Weather Service, before a single hurricane made landfall this year, the United States had already tied its yearly record for billion-dollar weather disasters, and the cumulative tab from floods, tornadoes and heat waves has eclipsed $35 billion.

If insurers don’t respond in a timely way to the business impacts of climate change, the report warns, insurance availability and pricing could be affected.

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