Insurance Industry Prepares for a Rocky Future


The President understands, but judging by coverage the American media is still in the dark. Very few seem to realize that North Dakota’s devastating floods are just the opening salvo in what will become a steady stream of severe weather stories. After two relatively cool years thanks to a strong La Ni√±a event – years that would have been scorching hot by Victorian standards – scientists are predicting that either 2009 or 2010 will be the warmest on record, and that warming will accelerate dramatically over the next decade. And though it’s impossible to peg any one event to climate change, the likelihood for severe weather is increasing.
“I actually think the science around climate change is real. It is potentially devastating,” Obama told reporters last week. “If you look at the flooding that’s going on right now in North Dakota and you say to yourself, ‘If you see an increase of two degrees, what does that do, in terms of the situation there?’ That indicates the degree to which we have to take this seriously.”

If politics makes you mistrust the White House, then perhaps pay attention to the insurance industry.
Beginning in 2010, the U.S. National Association of Insurance Commissioners will require insurance companies with annual premiums in excess of $500 million US to file yearly Insurer Climate Risk Disclosure Surveys. This will be the world’s first climate risk disclosure requirement, complete with reports on risk management and catastrophic models, and on how companies are working with clients to mitigate climate risk. The disclosure’s framework was developed with Ceres over the past two years, and regulators will use the disclosure statements to evaluate insurers’ solvency with regard to the risks of drought, flooding, wildfires, and other climate events.
The same truth is confronting insurers across the pond. A new report from the Association of British Insurers (ABI) says that the association’s previous climate change estimates (from 2005) were far too conservative, and that their estimates for future premiums will increase accordingly. Businesses and homes in areas likely to experience serious climate change-related events could see their premiums more than double. Natural disaster coverage premiums have increased already following 2008’s record number of dramatic weather events in the U.K.

Richard is a writer and editor based in Halifax, Nova Scotia who specializes in clean technology and climate change. He's the founder of One Blue Marble, a climate change activism blog and web site.

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