|Targeted News Service|
The insurance industry, the world's largest business with
"Weather- and climate-related insurance losses today average
Hurricane Sandy is only the most recent U.S. example of the kinds of increasing liabilities posed by severe weather events in a changing climate.
Managing a portfolio of
Risk and opportunity
"Where there are risks, there are opportunities," writes Mills. Responding to shareholder, regulatory, and market forces, three global initiatives [UN Environment Program Finance Initiative (1995), ClimateWise (2007), and the Kyoto Statement (2009)] have compelled 129 insurance firms from 29 countries to engage in activities including: supporting climate research; developing climate-responsive products and services; raising awareness; reducing in-house greenhouse gas emissions; quantifying and disclosing climate risks; incorporating climate change into investment decisions; and influencing public policy. The ultimate goal of these industry activities is reducing climate-related losses among their customers as well as reducing their own exposure to risk, which is rising in step with the magnitude and frequency of extreme weather-related events.
These insurers, together with reinsurance companies (the insurers of insurance companies), industry associations, brokers, catastrophe-loss modelers, and partners in the research community, have been using sophisticated analytical tools to quantify and diversify their exposure to climate change risk, more accurately price and communicate risk, and get adaptation and loss-prevention efforts up and running.
New insurance products and services
According to the study, 1,148 climate change adaptation and mitigation activities have emerged from 378 entities in 51 countries, representing
Pay-as-you-drive insurance policies, now numbering nearly 3 million, offer auto insurance based on number of miles driven rather than a fixed premium.
GPS technologies verify driving distances, and policyholders benefit from a more accurate insurance premium. The price signal of lower premiums for miles actually driven could reduce U.S. driving by 8 percent, and oil use by 4 percent, reducing the cost of driving by