A new report has angered some of the insurance industry’s leading players by giving only 3 per cent of all companies a ‘leading’ ranking in terms of their preparedness for the challenges posed by climate change.
The 3 per cent of companies who were deemed ‘Leading’ include ACE,
Munich Re,
Swiss Re,
Allianz, Prudential, XL Group, The
Hartford,
Sompo Japan and
Zurich.
“I would fundamentally disagree with the premise that the vast majority of insurers are unprepared for the challenges posed by climate change,” said Robert Hartwing, president of the Insurance Information Institute, speaking for the property/casualty industry and reinsurers. “The property/casualty industry and the reinsurance industry are and have been at the vanguard of managing climate-related risks for decades and in some cases centuries.”
The vast majority of insurers fell into the ‘Beginning’ or ‘Minimal’ rankings. The health and life & annuity insurers surveyed received the lowest ‘Minimal’ ranking, 89 percent and 80 percent respectively, according to the report.
To support the findings, Hartwig noted there are nearly 300 P/C insurers in North America that are a century old or older. To ensure their long survival insurers have built increasingly sophisticated catastrophe models, improved enterprise risk management models and they have kept a close watch on economic risks as well, he said.
Looking at insurer insolvencies since 1969, only 7 per cent of those carriers can attribute their demise to catastrophe-related losses, according to the institute.
By comparison, 44 percent of insurer insolvencies are associated with insufficient loss reserves or inadequate pricing, and most of those insurers were in the worker’s compensation and medical malpractice lines, said Hartwig, adding that “they have nothing to do with climate change.” (continued.)
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Last year, the Canadian property and casualty insurance industry was hit by the highest losses from catastrophic events in Canadian history, at a cost of about $3.4-billion, according to the Insurance Bureau of Canada
“I think it’s unfortunate that it takes such a 90-percent-of-the-glass-empty approach,” said David Kodama, senior director for research and policy analysis for the Property Casualty Insurers Association of America. “I do believe there is significant common ground that we can advocate on to raise our climate change consciousness level.”
The report, titled ‘Insurer Climate Risk Disclosure Survey Report & Scorecard: 2014 Findings & Recommendations,’ was conducted by Ceres and is based on a survey of 330 insurer disclosures last year.
