Vermont has enjoyed amazing weather since roughly the beginning of this year–that is, if you are not a big fan of snow, cold and rain. I have both enjoyed basking in this “endless summer” up north here while also been frightened about what it portends. It somewhat follows the inconsistency in the broader insurance market when it comes to dealing with climate change.
On the one hand, many international insurance and reinsurance organizations have been very vocal about climate change and the need of the insurance market to respond. Lloyd’s of London and other insurers called for collective action to address climate change earlier this year after a report from the U.K. regulator this week highlighted risks to their industry from global warming. “An increase in temperature of more than 2 degrees could lead to a lack of affordable insurance,” Carmen Bell, policy advisor for personal insurance and general insurance at trade body Insurance Europe, told Reuters.
This very much should be in the wheelhouse of the insurance industry to lead the way, one would think. On the other hand somewhat surprisingly, most P&C insurers are not adequately prepared for climate change-related risks, according to a Ceres survey that rated insurers as minimal, beginning, developing, or leading. Only 3 percent earned the leading rating, while 83 percent received the ratings of beginning or minimal. While there remains an active debate on the cause of climate change, our industry should be focused less on that and more on how we respond to and mitigate it.
My hope is that the captive insurance industry will follow the lead of some of the insurance leaders in this area. After all, that’s what good risk managers do–assess and protect their owners from risks.
Thank you all very much, and I look forward to hearing from you.