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Organizational Change
Despite Climate-Related Damages, Insurers Lack Strategies

Only one out of eight insurers said they have in-depth climate change strategies, according to a recent survey by investor advocacy group Ceres.

Only one out of eight insurers said they have in-depth climate change strategies, according to a recent survey by investor advocacy group Ceres.

The report, titled “Insurer Climate Risk Disclosure Survey: 2012 Findings & Recommendations,” is based on 184 company disclosures responding to a climate risk survey created by insurance regulators in California, New York and Washington.

In 2012, insurance regulators in these three states began requiring insurers writing in excess of $300 million in direct premiums to make public their climate-related risks.

This year Ceres found only 23 companies have comprehensive climate change strategies, of which most are large, foreign-owned companies in the property and casualty, life and annuity, and health insurance sectors.

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There was a remarkable diversity of views of climate science among those companies with comprehensive climate strategies, the report says. Companies such as ACE are funding primary climate change research and Swiss Re and others lend their brand to efforts at the Intergovernmental Panel on Climate Change. Other companies, such as Allstate and Travelers, are more ambivalent about the existence of climate change and what is causing it.

Last year Ceres reported only 11 out of 88 insurers surveyed had solid climate change policies. While this year’s report questioned more firms, there was little change in the results — less than 13 percent of surveyed companies are making climate change a serious part of their business plans.

The insurance sector is a key driver of the economy and its lack of climate change preparedness could threaten both the economy and taxpayers, Ceres says.

Eleven extreme weather events in the U.S. each caused $1 billion or more in losses in 2012, the organization says. Hurricane Sandy inflicted $50 billion in damages, including tens of billions of insured losses by property and casualty companies that harmed quarterly profits. Losses sustained by the National Flood Insurance Program are being passed on to U.S. taxpayers, as well as the mounting cost of disaster relief spending.

While insurers may be lagging, a growing number of investors are showing concern over climate change. Last month, the Carbon Disclosure Project announced that investors representing a third of the world’s invested capital have asked more than 5,000 public companies to report carbon emissions and climate change strategies.