"The majority of scientists acknowledge today that there is global warming, first of all."Who said that? Some crazy tree hugging, sky-is-falling, Greenpeace-contributing bearded environmentalist? Not close. That was Ivo Menzinger, head of sustainability and emerging risks for Swiss Re, a giant Zurich-based provider of backup insurance to insurers.
He added, "What we are saying is that despite the uncertainty, the potential effects of climate change are such" that companies should err on the side of safety.
In fact, the insurance industry is becoming increasingly concerned about global warming:
Some of the industry's largest companies have sided with environmental groups in recent years to argue that global warming exists and that man-made causes are adding to the severity and cost of natural catastrophes.The entire insurance industry is not quite on board yet, especially in the United States.
Although no insurer has cited global warming's increased risks as a reason for raising rates, some are funding their own research on the topic and, in the political realm, are supporting measures to reduce emissions.
American International Group Inc., the largest U.S. insurer, says it recognizes the possibility that climate change might be increasing insurance losses, though it is awaiting more scientific proof of a link. The New York-based company is considering a policy of targeting investments toward companies involved in mitigating greenhouse gases.
"We take the possibility seriously and efforts to address it seriously," said Chris Winans, an AIG spokesman.
The industry's interest goes beyond property damage caused by hurricanes. Swiss Reinsurance Co., a giant Zurich-based provider of backup insurance to insurers, says climate change could increase the severity and spread of contagious diseases by extending the ranges of disease-carrying insects such as mosquitoes, altering markets for life and health insurance, while new rules on industrial emissions could generate shareholder suits, changing the market for directors' and officers' liability coverage.
Europe, however, is a different story:
In general, European insurers are more apt to back the notion that the climate is changing at all and that governments should do something about it. Unlike its U.S. counterpart, the Association of British Insurers actively promotes public awareness about global warming and in June published a study concluding that climate change could cause annual losses from major storms to increase by two-thirds, to $27 billion, by the year 2080.Swiss Re even employees 20 scientists to study the question and has been politically active in an effort to push the Kyoto Protocol, an international agreement to limit so-called greenhouse gas emissions.
The study also said that under "high-emissions scenarios," in which carbon-dioxide levels double during the century, insurers would need to increase their capital by 90 percent to cover U.S. hurricanes and 80 percent for Japanese typhoons. The higher losses and capital costs could result in premium increases of 60 percent in those regions, the study said.
