Insurers Taking Climate Change Seriously
Oct. 20--Unlike most insurers, who "show an overall lack of focus in addressing climate risks," many insurers based in Connecticut or with major operations in the state, scored highly in a new study by a nonprofit advocating for sustainability leadership.
The Hartford, Travelers, Lincoln National, AIG, Munich Re, Prudential, MetLife, Chubb and XL all had comprehensive responses to the surveys, Ceres said.
Ceres analyzed reports submitted by 148 insurers, finding that casualty insurers and reinsurers are taking climate change most seriously. Those insurers have the most exposure to climate risks, the report said.
Of 64 property and casualty insurers, 22 percent are meeting the best practices for enterprise wide climate risk management, and 34 percent are meeting top standards for climate change analytics.
Life and annuity insurers are more indirectly affected, largely in how they treat carbon intensive assets and renewable energy projects in their investment portfolios, the report said. It singled out MetLife and Prudential as leaders in the category.
The report said health insurers do not see climate change as a threat to public health and none produced comprehensive survey answers. Ceres, however, says climate change will affect air quality and could increase the danger of pest-carried diseases.
Ceres said, "As fundamental risk managers for society, re/insurers should be doing more to leverage their unique influence in public dialogues on climate risks and managing those risks."
Climate change is increasing extreme cold and heat, and probably is contributing to droughts and excessive rainfall, the report says, pointing to the storms that flooded Louisiana this year. Because of that, the nonprofit is pushing companies to lobby for more funding for climate science research, stronger building codes and stronger pollution controls.
In its survey, Travelers said it believes its catastrophe modeling may be becoming less accurate because of the changing climate.
"As a result of these analyses, we have limited the writing of new property and homeowners business in some markets and have selectively taken underwriting actions on new and existing business. These underwriting actions on new and existing business include tightened underwriting standards, selective price increases and changes to deductibles specific to hurricane-, tornado-, wind- and hail-prone areas," Travelers wrote.
Ceres also quoted companies that are aware that their approach to the environment is critical to their good-corporate-citizen reputation.
"Competition in property casualty insurance is intense. We believe that companies that themselves demonstrate a strong, comprehensive and sustained approach to environmental stewardship and offer appropriate products at the appropriate price can build a green insurance brand," The Hartford wrote. "Also, in the war for talent, companies that can demonstrate a serious commitment to environmental stewardship are better positioned to attract and engage talented employees."
Similarly, Cigna wrote: "Corporate reputation on performance related to environmental responsibility, particularly on issues related to climate change, is increasingly important to our corporate clients .... Also, our reputation on performance related to climate change issues is becoming increasingly important to our employees, investors and other stakeholders."
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