Climate Change & Insurers

If enhanced climate change takes place as many scientist think it will, the insurance industry may be the most affected sector of the economy due to climatic changes that have the ability to affect their bottom line profits or losses.  Having relatively stable, long-term climate conditions is an important factor in determining their risk factors and any abrupt changes may carry serious implications for their profitability.  While the most visible impacts would appear to affect the property-casualty insurers, health insurers also face challenges due to the spread of tropical diseases in what may be a warmer, wetter world.
 
Since 1995, I have been involved in developing "no regrets" strategies and programs to deal with this potential threat. From 1996 to 2001 worked with Dr. Jeremy Leggett who first began the dialogue between the environmental community and the insurance industry. Some examples of the insurance-related initiatives include:


Vulnerable transmission lines could be minimized via clean distributed resources 

 

In 1999 delivered a paper on distributed generation for a Columbia University forum that, even then, mentioned terrorism prospects. 

In year 2000, wrote the US DOE funded The Power to Insure showing  why insurers may become advocates of distributed generation to lower  business interruption losses due to natural and terrorist caused disasters as well as to mitigate climate change.

A more recent article in the Autumn 2010 issue of NE Sun looks at microgrids and SmartGrids highlighting advantages and disadvantages in terms of resiliency.


 

Seven tropical storms march across the Atlantic. on August 25, 1995

  Authored Climate Change and the Insurance Industry: Uncertainty Among the Risk Community a major study on the effect of climate change on the insurance industry and why insurers have the potential to become significant investors into clean energy options while protecting their own assets.  European reinsurers have been some of the most vocal in calling for greenhouse gas reductions. 

Encouraged further insurance industry involvement with loss mitigation related to energy efficiency and  renewable energy for disaster mitigation and recovery.





High temperature halogen torchiers have caused many fires resulting in insurance losses (Photo Courtesy of LBL)


Building upon pioneering work by Dr. Evan Mills at Lawrence Berkeley Lab, developed a highly successful utility program for replacing high temperature halogen torchiers with  efficient, cool compact fluorescents that  enhance  efficiency and safety.

As successful as it was, the original plan went into greater depth than the final utility version. Because halogen torchiers have extremely high temperatures leading to numerous fires, the plan was to have direct involvement of insurers, fire departments-and Shriners who sponsor burn hospitals for children.