Swiss Re withdraws from carbon emissions trading activities; Insurance industry still evaluating climate change issues
Swiss Re has enjoyed a reputation in the marketplace as an insurance market leader in climate change issues. However, apparently due to falling carbon prices and much weaker trading of carbon emissions allowances in European markets, Swiss Re has announced that it is closing its carbon emissions trading desk and will no longer be engaging in carbon trading activities. Swiss Re’s move seems somewhat surprising given some of its significant prior efforts in this area, including deals in China and having been scheduled as a speaker at the upcoming EU Emissions Trading Conference in July. In any event, Swiss Re’s move likely underscores the fact that the insurance industry will continue to view climate change issues through the lens of profit opportunities and act accordingly.
Continue Reading...Ceres reports that insurers want to be part of the climate change solution
In April 2009, Ceres published a report entitled “From Risk to Opportunity, Insurer Responses to Climate Change.” The report contains responses and significant information from over 12 insurance companies, as well as several brokers, insurance consultants, insurance associations regarding the climate initiatives being undertaken by the industry, including coverage for green buildings, renewable energy, carbon risk management, and officers’ liability insurance to tackle climate change and rising weather-related losses in the US. The report speaks to the many insurer activities identified in our previous blog post regarding insurance industry climate change strategy and its implications for corporate policy holders, as well as the more recent March 17, 2009 National Association of Insurance Commissioners (NAIC) climate risk disclosure requirement for insurance companies. The insurance industry’s response aims to address more than $200 billion in estimated losses to the global economy attributed to climate change, but critics say the industry’s response is too little, too late.
Continue Reading...Record insurance losses in Texas ignite debate over state's ability to address rising risks related to climate change
Two major hurricanes that hit the Texas coastline in 2008 sent damage claims soaring, and resulted in $6.6 billion in losses for state insurers, even as the insurers collected a record-high $5.17 billion in premium revenue, according to data released by the Texas Department of Insurance (TDI). Policyholder groups are concerned that the insurance companies will exploit these record losses as a means to raise rates to policyholders. "The effect of climate change on weather patterns raises very real concerns," said Alex Winslow, executive director of the consumer group Texas Watch, "however, we believe that insurers are using the potential for climate change to increase rates more than is necessary." Consequently, one proposal currently being debated in the state legislature would require rate increases to be approved by the state insurance commissioner before they go into effect. Currently, rate increases go into effect as soon as insurers file a notice with TDI and can only be challenged after the fact.
Continue Reading...Insurance companies required to disclose climate change risks - will disclosure facilitate risk mitigation, climate change regulation, or litigation?
Co-authored with John Wyckoff.
On March 17, 2009, the National Association of Insurance Commissioners (NAIC), an organization composed of the chief insurance regulatory officials of the 50 states, the District of Columbia and five US territories, adopted the requirement that insurance companies having in excess of $500 million in premiums disclose to regulators and the public the financial risks they face from climate change, as well as their response actions taken to address these risks, by May 1, 2010. Those companies with premiums in excess of $300 million are required to report a year later and those with lower premiums may voluntarily report at any time. The NAIC believes that insurer disclosures will allow regulators to understand the impact of climate change on insurance (property, casualty, life, and health) including its availability, affordability, and solvency.
Continue Reading...AIG withdraws from climate change lobby group
After receiving growing criticism from Congress for engaging in lobbying activities while essentially being owned by US taxpayers as a result of a federal rescue package last year, AIG formally withdrew its membership in the US Climate Action Partnership last Friday. As noted in prior blog entries, the insurance industry continues to be actively involved in seeking to influence climate change policy and AIG’s public efforts date back to at least 2006. While AIG’s unique financial situation makes its awkward for AIG to be directly lobbying lawmakers on these issues, AIG is still pursuing a fairly public strategy on climate change.
Continue Reading...Insurers facing climate change coverage litigation, creating climate change policies
While insurers are bracing for potentially significant climate change coverage litigation (see, e.g., Kivalina) under past and current policies, insurers are simultaneously beginning to develop insurance products for risks associated with technologies designed to address climate change issues.
Continue Reading...Insurance industry climate change strategy has serious potential implications for corporate policyholders
Historically, when a significant liability risk begins to emerge, the insurance industry employs a three-pronged strategy in response. Signs of this three-pronged strategy by the insurance industry are already manifesting themselves in the climate change arena. First, as noted in a prior blog entry, insurers are beginning to litigate aggressively against policyholders seeking coverage for climate change claims. Second, the insurance industry is carefully monitoring legislation and public policy initiatives in order to shape the debate (and limit their financial exposure). Finally, the insurance industry is beginning to market “new” policies to address climate change risks.
Corporate policyholders should monitor the insurance industry efforts closely including: (1) being alert to new exclusions being added to policies; (2) watching legislative efforts that might result in valuable coverage being undermined; and (3) evaluating whether new insurance products being marketed are necessary to address potential gaps in a company’s existing coverage.
Continue Reading...Insurer seeks to avoid climate change claim coverage obligations
Sometimes great storms announce themselves with a simple breeze and the same can be said about litigation that is likely to ensue between corporate policyholders and insurers as they begin to grapple with difficult insurance coverage issues surrounding climate change. A recent case filed in Virginia by Steadfast Insurance Company seeking to avoid any coverage obligations relating to allegations in the Native Village of Kivalina v. ExxonMobil Corp., et al. litigation reveals some of the arguments the insurance industry is likely to make in this arena.
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