Climate change risk now better managed by insurers

Sarah Veysey in Business Insurance: Insurers and reinsurers are becoming more involved in managing risks related to climate change, though more work needs to be done, recent research concludes. In addition, the outcome of the recent U.N. Climate Change Conference in Durban, South Africa, was disappointing for the industry, according to a leading reinsurer.

In a recent report on members of ClimateWise, a group of insurers focused on reducing the effects of climate change, PricewaterhouseCoopers L.L.P. found that insurers have a strong commitment to addressing the issue.

The report found that the group's 26 insurer members had an 88% compliance rate with the group's six principles, which are to lead in risk analysis, inform public policymaking, support climate change awareness among customers, incorporate climate change into investment strategies, reduce the environmental impact of their businesses, and report and be accountable.

PwC said the insurers demonstrate a good level of disclosure related to their governance structures to address climate change risks and, for many, managing climate change risk is a board-level responsibility.

The study found that the members had a 96% compliance rate with the principle to “lead in risk analysis,” 92% compliance with the goal to reduce the environmental impact of the business, 91% compliance with the aim to support climate awareness among customers, 90% compliance with the aim to report and be accountable and an 89% compliance rate with the principle to inform public policymaking. However, the principle to “incorporate climate change into investment decisions” remains an area of “relative underperformance,” according to the report, with only a 72% compliance rate....

St. Charles County, Missouri, June 22, 2008 -- City of St. Charles Fire Captain Richard Ohlms, right, and Capt. David Lewis load sandbags into a gator at the Elm Point levee to keep the water from overtopping. Jocelyn Augustino/FEMA