By Elise Linscott
Most insurers have not adequately prepared for climate change-related risks, according to a survey conducted by Ceres, a nonprofit organization that advocates for sustainability leadership.
More than 300 companies responded to the survey. Certain states required insurers writing in excess of $100 million to report their climate-related risks, as well as the steps they are taking to respond to those risks. Companies were given a rating of Minimal, Beginning, Developing, or Leading.
“In general, most of the companies responding to the survey reported a profound lack of preparedness in addressing climate-related risks and opportunities. Only 9 insurers, or 3% of the 330 companies overall, earned a Leading rating. The vast majority of insurers (83%) earned Beginning or Minimal ratings. On an encouraging note, the report identified a small subset of strong leading practices by insurers in each of the major themes. “Given the strong scientific consensus on climate change, the rest of the industry would be well advised to consider adopting these innovative practices,” the report reads.
Although “most P&C insurers are paying inadequate attention to climate risks,” the report also stated that “P&C insurers are still ahead of L&A (life and annuity) and health insurance providers.”
Mike Kreidler, chair of the National Association of Insurance Commissioners’ Climate Change and Global Warming Working Group, “strongly encourages” insurers to act now, and not to wait until disaster strikes.
“This industry should be focused less on what is causing climate change and more on how we respond to and mitigate it,” he wrote in the report.
Kreidler also commended the leadership practices of certain property and casualty companies, “including The Hartford, Catlin, Hanover, the XL Group and Swiss Re” for “assessing and protecting themselves and their clients from climate change risks.
“As this valuable report points out, the result (of adequate climate risk-related response) will be an insurance industry whose markets expand rather than contract in the face of growing climate change risks,” Kreidler wrote.