Almost 90 percent of insurance companies lack a comprehensive plan to address climate change and fewer than half of them view it as a likely source of financial losses, according to a report released today.
Only 23 of 184 insurers surveyed demonstrated a “comprehensive climate change strategy” and 88 said they consider climate change a future loss driver, Boston-based Ceres said today in a report.
“Climate change exists, it’s happening, it’s going to have an impact,” Mike Kreidler, Washington State insurance commissioner, said in a phone interview. “It has the potential of being a real game changer” for investments and underwriting.
Industrywide, insured losses from natural disasters in the U.S. reached $58 billion in 2012, more than double the average from 2000 to 2011, according to reinsurer Munich Re. Superstorm Sandy, last year’s most costly event, caused insured losses of about $25 billion, Munich Re said.
Ceres is a lobbying group representing investment funds, environmental organizations and groups that promote social responsibility. It said that insurers Ace Ltd. (ACE), Travelers Cos. (TRV) and Hartford Financial Services Group Inc. (HIG) were among “industry leaders” that provided the most comprehensive responses to the survey.
Insurance companies should “treat climate change as a corporate-wide strategic issue,” Ceres said. It recommended companies support climate research and develop models that anticipate weather-related catastrophes.
The survey was developed by the National Association of Insurance Commissioners, Ceres said. State regulators had required that larger insurers be surveyed on climate-related risks.
Foreign-owned companies led U.S. insurers in demonstrating that they have “comprehensive climate change strategies,” according to the report. They included Allianz SE (ALV), Europe’s biggest insurer, Swiss Re Ltd. and Zurich Insurance Group AG. (ZURN)
“The climate is changing globally, there’s no question,” Lindene Patton, chief climate product officer at Zurich, said in an interview. Scientists have shown that there is a “defined association” between wildfires, droughts and other severe events and climate change, Patton said.
Zurich has developed “underwriting criteria and engineering support services” to help customers reduce risk from such events,Patton said. The insurer advises policyholders on items including roofing materials, backup power sources and water management.