Should we push back from the water's edge? Should we recognize a rising sea level and fear massive storm surges that crest on those high tides? Should we change zoning and permitting and accept a new, safe reality?
Those are some of the questions we surfaced on recent shows. Here's the links to our radio and TV sites so you can listen to some of the answers: http://www.blogtalkradio.com/renewable-now; http://www.arpinbroadcastnetwork.com/Arpin-ABN-Home.html
Now we follow with a wonderful article from Ceres, a group we had not heard of till we found this piece. They sound like a great group, one we hope to have on soon.
We'll break this up into a couple of parts. Let us know what you think:
About Ceres: Ceres is an advocate for sustainability leadership. Ceres mobilizes a powerful coalition of investors, companies and public interest groups to accelerate and expand the adoption of sustainable business practices and solutions to build a healthy global economy. Ceres also directs the Investor Network on Climate Risk (INCR), a network of 100 institutional investors with collective assets totaling more than $11 trillion.
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2012 was the warmest year on record in the lower 48 states and the second most extreme weather year in United States history. Insurers are increasingly acknowledging that extreme weather has become the new normal, yet a new report from Ceres finds that many in the industry are only just beginning to think about how to address the effects climate change may have on their business – while a small group of companies is leading the way.
The Ceres report, Insurer Climate Risk Disclosure Survey: 2012 Findings & Recommendations, is based on 184 company disclosures in response to a climate risk survey developed by insurance regulators. Surveys were completed by insurers licensed to operate in three states – California, New York and Washington – that require climate risk disclosure. Collectively, these companies represent a significant majority of the American insurance market.
Ceres found only 23 companies in the property & casualty, life & annuity and health insurance sectors have comprehensive climate change strategies. Those companies provide a roadmap for the rest of the industry as it begins to wrestle with the issue.
“Every segment of the insurance industry faces climate risks, yet the industry’s response has been highly uneven,” said Ceres president Mindy Lubber, who wrote the report foreword. “The implications of this are profound because the insurance sector is a key driver of the economy. If climate change undermines the future availability of insurance products and risk management services in major markets throughout the US, it threatens the economy and taxpayers as well.”
“Climate change is potentially a serious financial threat to the insurance industry, and needs to be on insurers’ and regulators’ radar,” said Washington State Insurance Commissioner Mike Kreidler, a leading advocate for stronger climate risk disclosure and action by insurance companies. “If insurance is to remain available and affordable, companies will need to adapt. The last thing we want to see are unprepared companies simply pulling out of markets or seeking unreasonable rate hikes.”
Eleven extreme weather events each caused at least a billion dollars in losses last year in the United States. Hurricane Sandy alone caused $50 billion in economic losses, including tens of billions of insured losses by P&C firms whose quarterly profits suffered as a result. Additionally, American taxpayers are absorbing even bigger financial hits thanks to losses sustained by the National Flood Insurance Program (NFIP) as well as growing costs for disaster relief spending.
At first glance it might appear that only property and casualty insurers have reason to be concerned about claims related to climate change. In fact, every segment of the insurance industry has climate risks. Life insurers, for example, own hundreds of billions of dollars worth of real estate in vulnerable coastal areas.
“As a long-term investor, CalSTRS is dedicated to making sure climate change is factored into the regular risk management practices of our portfolio companies,” said Jack Ehnes, chief executive officer of the California State Teachers’ Retirement System (CalSTRS), the largest educator-only pension fund in the world and former Colorado insurance commissioner, who spoke at today’s news conference. “By integrating climate change risk management into their practices, insurance companies greatly improve their abilities to offer sustained shareholder value. This report gives us yet another tool as we engage with companies on climate change and other sustainability challenges.”
Key report findings
- The quality of overall disclosure and performance by the 184 insurers was low – the average score, on a scale developed by Ceres, was 7.3 points out of a possible 50 points.
- Of the 23 insurance companies with a comprehensive strategy to cope with climate change, 13 of those companies are foreign-owned, and eight are P&C companies.
- Based on their climate risk disclosure responses, the industry leaders include: ACE Ltd., Munich Re, Allianz Group, Swiss Re Group, Farmers Group, The Prudential Group, Travelers Group, Hartford Insurance Group, Kaiser Foundation Health Plan and Zurich US Insurance.
- Smaller insurance companies tend to be far less prepared to mange climate risk than larger companies.
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