A newly published US study has found that only one in eight of US property & casualty, life & annuity, and health insurance companies have put in place comprehensive strategies for increased claims resulting from climate change. The result is that many insurance companies, the unprepared, may sooner or later pull out of high risk markets or increase rates.
Ceres recommends that insurers:
- Treat climate change as a corporate-wide strategic issue, affecting all functions, at all levels, and formalize this in a public corporate policy statement.
- Evaluate the potential for changes in future risk exposure due to climate change.
- Provide transparent, useful disclosure.
- Inform public policy.
Insurance regulators are urged to:
- Continue to mandate annual, public disclosure to foster more active engagement by insurers on the issue of climate change.
- Clarify disclosure expectations.
- Build climate risk considerations into the financial oversight process
- Create more shared resources to help insurers analyze and respond to climate-related risks and opportunities, including investment risks and opportunities.
- Engage with insurers, consumers and other policymakers to better understand the nature of climate change risks.
Ceres is a network of investors, companies and public interest groups which aims to accelerate and expand the adoption of sustainable business practices and solutions to build a healthy global economy.
Similar data does not appear to be available for Canadian insurers but a June 2012 report on regional climate trends from the Institute for Catastrophic Loss Reduction for The Insurance Bureau of Canada concludes that there are “overall concerns about the needs for strategies to reduce vulnerability and exposure in view of the increasing risks of more extreme hazards.”
A summary and link to the full 61 page Insurer Climate Risk Disclosure Survey (free but registration required) are available at http://www.ceres.org/press/press-releases/is-the-u.s.-insurance-industry-prepared-for-climate-change
The Insurance Bureau of Canada report Telling the Weather Story is available at http://www.ibc.ca/en/natural_disasters/documents/mcbean_report.pdf