Climate Change Peril Insurers See: Risk perceived by insurance industry may alter political balance

[DeepModem Mom]

WP op-ed: The Climate Change Peril That Insurers See
By John Morrison and Alex Sink
Thursday, September 27, 2007; Page A25

....Ten years ago, Peter Levene, chairman of Lloyds of London, was skeptical about global warming theories, but no longer. He believes carbon emissions caused by human activity are warming the Earth and causing severe weather-related events. "At Lloyds, we feel the effects of extreme weather more than most," he said in a March speech. "We don't just live with risk -- we have to pick up the pieces afterwards." Lloyds predicts that the United States will be hit by a hurricane causing $100 billion worth of damage, more than double that of Katrina. Industry analysts estimate that such an event would bankrupt as many as 40 insurers.

Lloyd's has warned: "The insurance industry must start actively adjusting in response to greenhouse gas trends if it is to survive." The Association of British Insurers has called on governments to "stem ominous weather related trends" by cutting carbon emissions. U.S.-based companies AIG and Marsh -- respectively, the largest insurer and broker -- have joined with other corporate leaders to urge Congress to reduce U.S. greenhouse gas emissions 60 to 80 percent by mid-century. AIG's policy statement on climate change "recognizes the scientific consensus that climate change is a reality and is likely in large part the result of human activities that have led to increasing concentrations of greenhouse gases in the earth's atmosphere."...

Nervous investors have begun asking insurers to disclose their strategies for dealing with global warming....

Insurance companies are reacting. Some have simply abandoned catastrophe-prone markets or are jacking up rates. Other insurers have taken steps in the battle against climate change by offering premium incentives for "green" construction and hybrid cars, investing in companies that cut carbon emissions or develop clean energy, and offering "pay per mile" car insurance. Still others are reducing their own carbon footprints, promoting markets for carbon-credit trading and even moving to protect carbon-consuming forests.

Insurance companies make money by accurately assessing risk. For decades environmentalists have been sounding the alarm about global warming. Now major insurers are becoming engaged as they look after their own assets and those that they cover. Federal reluctance to commit to international agreements on climate change, or otherwise cap total carbon emissions, appears to be driven by influential businesses that fear the limitations will hurt their bottom lines. But the risk perceived by the insurance industry -- the world's largest economic sector -- may shift that political balance. At the least, it should tell us something.

(John Morrison is the state auditor of Montana. Alex Sink is the chief financial officer of Florida. Both oversee state insurance departments and are members of the Climate Change Task Force of the National Association of Insurance Commissioners.)

http://www.washingtonpost.com/wp-dyn/content/article/2007/09/26/AR2007092602070.html?nav=most_emailed

[kestrel91316]

1. When enough investors get hit in the wallet, we will see action on

climate change. Not until then.

Sadly for the children, it will be too late.

[DeepModem Mom]

3. I fear you're right. nt

[Viva_La_Revolution]

2. The most disgusting part of the whole article

is this sentence; "...the insurance industry -- the world's largest economic sector..."