Insurer responses to climate change

Ceres.org has just come out with a report written by the indefatigable Evan Mills, a friend of this blog: Hundreds of new insurance initiatives, including coverage for green buildings, renewable energy, carbon risk management, and officers’ liability are being offered to tackle climate change and rising weather-related losses in the U.S. and globally, according to a major new report released today by the Ceres investor coalition.

The report outlines 643 climate-related activities in the US and abroad, including a doubling in new product offerings launched in 2008 alone. Among the newest products and services are coverage for wind and solar production shortfalls, premium discounts for building efficiency renovations, carbon capture and storage insurance, and coverage for humanitarian emergencies prompted by drought. Despite more creative offerings and a deeper institutionalization of climate-related activities within the sector, the report states that progress by the industry as a whole is still in its infancy.

“Insurers are integrating global warming concerns into many products and services, from green home and pay-as-you-drive auto insurance for consumers to renewable energy insurance for companies riding the clean energy wave,” said Mindy S. Lubber, president of Ceres, a leading U.S. coalition of investors and environmental groups, which commissioned the report. “Still, the scope and breadth of the insurer response fails to match the scale and urgency of the risks—or the opportunities—facing the industry.”

…“A vanguard of insurers is taking bold steps to adapt their business model to the realities of climate change,” said Dr. Evan Mills, the report’s author and scientist at the U.S. Department of Energy’s Lawrence Berkeley National Laboratory. “In many ways, insurers are still catching up to their customers, who are rapidly changing the way they construct buildings, design products, and produce energy, in response to climate change.”

The report, From Risk to Opportunity: Insurer Responses to Climate Change, comes on the heels of more than $200 billion in global catastrophic losses in 2008, the third highest losses ever reported, including $40 billion from Hurricanes Ike and Gustav in the U.S. Many of these losses were insured losses….