March 09--An investors group says the insurance industry needs to better prepare for coming shifts in the earth's climate.
The critique came in a report released Thursday by Ceres, a Boston-based coalition of institutional investors that advocate for environmentally sustainable practices.
Ceres analyzed 184 insurance companies' responses to a survey last year required by insurance regulators in California, New York and Washington. The survey asked insurers to disclose their climate-related risks.
Ceres concluded that insurers are ill prepared for climate change, and that the economy will suffer as a result.
The report is critical of what is views as insurers' reluctance to connect the increased frequency of hurricanes and other weather catastrophes to a changing climate. It targets insurers' investments in businesses that contribute greenhouse gases to the atmosphere, and it criticizes a wide range of other practices.
The criticism was of all insurers -- not just the property-casualty insurers that pay billions of dollars in claims each year because of hurricanes and other catastrophes. Life insurers and health insurers also should have a climate strategy, the Ceres report said.
"While companies recognize the potential for investment losses in carbon-intensive industries under future carbon regulatory regimes, no insurers describe screening out carbon-intensive businesses," wrote the report's authors, Sharlene Leurig and Andrew Dlugolecki.
In response, a property-casualty insurance trade group said insurers are meeting their commitments to policyholders.
"The insurance industry continues to enhance their underwriting, preparedness and management of catastrophic risk, including those affected by changing climatic conditions," said David Kodama, senior director of research and policy analysis with the Property Casualty Insurers Association of America.
"Hurricane Sandy and the severe winter storm systems that have devastated the Northeast are recent examples of the resilience of this industry in meeting its obligations and commitments to policyholders," Kodama said..
Robert Hartwig, president of the industry-funded Insurance Information Institute, said property-casualty insurers have advocated for stronger zoning regulations and codes to reduce the likelihood that a catastrophe will damage buildings.
The Ceres report did commend Aetna, The Travelers Cos., UnitedHealth Group, ING and FM Global for making strides to reduce their emissions of greenhouse gases. It also commended The Hartford Financial Services Group as a leading insurer for its policy on climate change with respect to raising capital, business-to-business activity, retail sales, recruitment and other factors.
The Hartford's spokesman, Thomas Hambrick, said: "The Hartford has been a leading insurance company in recognizing that climate change is a very real risk, not only to insurance companies but to our policyholders, businesses and the overall economy. We are committed to understanding, managing and mitigating the risks associated with global climate change."
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