Climate-Change Related Weather Pounds Insurers

Hurricane Sandy

by | May 16, 2013

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Hurricane SandyThe US insurance industry expects climate-change related storms and weather occurrences to worsen — but isn’t doing much to combat global warming, the New York Times reports.

Peter Höppe, who heads Geo Risks Research at the reinsurance giant Munich Re, cites studies that forecast a rise in future summer droughts, severe cyclones and increasing risk of storm surge.

Extreme weather — from Hurricane Sandy to the worst drought in 50 years — struck US insurers hard last year, generating $35 billion in privately insured property losses, the New York Times reports. This figure is $11 billion more than the average over the last decade.

But when columnist Eduardo Porter asks Höppe what the US insurance industry is doing to address climate change, Höppe says “The industry has really not been engaged in advocacy related to carbon taxes or proposals addressing carbon.” Some big European reinsurers including Munich Re and Swiss Re support efforts to reduce CO2 emissions, Höppe  says, but their US counterparts “have not engaged at all.” Instead, he says, the insurers focus on zoning rules and disaster mitigation.

Just one-eighth of US insurers surveyed by sustainability leadership advocate Ceres have comprehensive climate change strategies. The report, published in March, is based on 184 company disclosures in response to a climate risk survey developed by insurance regulators. Ceres found only 23 companies — mainly large, foreign-owned and drawn from the property and casualty, life and annuity and health insurance sectors — that have comprehensive climate change strategies.

Another report published the same month said the Federal Emergency Management Agency mandatory flood insurance program is “not effective.” FEMA should not extend its mandatory flood insurance program to areas without levees and needs a more modern approach to analyzing and managing flood risk behind levees, according to the report from the National Research Council.

General Motors, Nike and Starbucks are among the 40 businesses that have signed a statement urging federal policymakers to take action on climate change, calling it “one of America’s greatest economic opportunities of the 21st century.” Ceres’ Business for Innovative Climate & Energy Policy (BICEP), which organized the Climate Declaration campaign, says the signatories generate a combined annual revenue of about $611 billion.

Photo Credit: New Jersey National Guard via Flickr

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