INSURANCE COMPANIES PREPARE FOR CLIMATE CHANGE

For Insurers, No Doubts on Climate Change

Eduardo Porter, May 14 2013 (NY Times)

“…[N]atural catastrophes across the United States pounded insurers last year, generating$35 billion in privately insured property losses, $11 billion more than the average over the last decade…And the industry expects the situation will get worse…Most insurers, including the reinsurance companies that bear much of the ultimate risk in the industry, have little time for the arguments heard in some right-wing circles that climate change isn’t happening…[and accept that it is caused by humans. But]…the focus of insurers’ advocacy efforts is zoning rules and disaster mitigation [instead of prevention].

…[The concentration of heat-trapping carbon dioxide in the atmosphere [recently] reached 400 parts per million…The milestone puts the earth nearer a point of no return, many scientists think, when vast, disruptive climate change is baked into our future…[So] why hasn’t corporate America done more to sway its allies in the Republican Party to try to avert a disaster that would clearly be devastating to its own interests?”

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“…[The insurance industry may want to avoid] controversies over energy policy. But perhaps its executives simply don’t feel so vulnerable. Like farmers, who are largely protected from the ravages of climate change by government-financed crop insurance, insurers also have less to fear than it might at first appear…The federal government covers flood insurance, among the riskiest kind in this time of crazy weather. And insurers can raise premiums or even drop coverage to adjust to higher risks. Indeed, despite Sandy and drought, property and casualty insurance in the United States was more profitable in 2012 than in 2011, according to the Property Casualty Insurers Association of America.

“But the industry…[is evolving. Insurance companies] dropped their support for [the Heartland Institute, and Heartland VP Eli Lehrer, who led an insurance-financed project, left to help]…start the R Street Institute, a standard conservative organization…[that] believes in climate change and supports a carbon tax…[I]t is financed largely with insurance industry money…[Some Republicans in the House and Senate] would be open to legislation to help avert climate change…[and Exelon is sympathetic, probably] because a carbon tax would give an edge to gas over its dirtier rival, coal…[but] with the exception of 2004 and 2005, when a string of hurricanes from Ivan to Katrina caused damage worth more than $200 billion…they haven’t yet experienced hefty, sustained losses attributable to climate change…[T]he best hope for those concerned about climate change…[is] that global warming isn’t just devastating for society, but also bad for business.”

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