Thursday, 20 July 2006
The Insurance Industry Goes Green
Melting ice caps? Floods? Hurricanes? The debate about global warming — and its consequences — is far from settled, but the insurance industry is starting to take sides.
Big business doesn’t usually find itself on the same side as the environmental movement. But when you’re in the business of insuring against catastrophe and property loss, climate change has a direct impact on your bottom line.
The famed insurance company Lloyds Of London recently released a report called “Climate Change: Adapt Or Bust.” While mainly a call for the insurance industry to develop new models of predicting the risk posed by weather catastrophes, the report also calls for industry-at-large to take more responsibility for its impact on the environment.
The report’s executive summary opens with the words “TOO LITTLE BUT NOT TOO LATE.” The summary goes on to say “This report focuses on adaptation but we recognise that mitigation of the risk itself (ie the reduction of CO2 emissions) is crucial.”
Lloyds isn’t alone. Global insurance broker and risk management firm, Marsh Inc., released a 30-page report called “Climate Change: Business Risks and Solutions.” American International Group, or AIG, has become the first U.S.-based insurance company to create a policy specifically about climate change. It is also in the process of creating an “Office of Environment and Climate Change.”
The debate on climate change isn’t going away. But with the multi-billion dollar insurance industry stepping into the ring, it’s about to get more interesting.
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