Insurance Pressure Points
As a result of the September report by Ceres entitled Availability and Affordability of Insurance Under Climate Change: A Growing Challenge for the U.S., ClimateBiz reported in early December that “20 leading U.S. investors urged 30 of the largest publicly-held insurance companies in North America to disclose their financial exposure from climate change and steps they are taking to reduce those financial impacts.”
It’s interesting to see how everything is working out, because a lot of the pressure points within corporations and industry could be stimulated by the insurance industry. Top-down change in other words.
In addition to the risk of direct losses due to physical weather-related events, the letter asks insurers to look strategically at climate change and how it could affect the long-term value of the investments that enable them to pay claims and remain profitable.
“Insurers could face a double whammy or a one-two punch from climate change. In addition to driving up claims, it can affect the value of the stocks and bonds in insurers’ investment portfolios,” said Connecticut Treasurer Nappier, whose $21 billion pension fund has more than $500 million invested in property-casualty and reinsurance stocks.
As companies begin to realize their real exposure to climate change, they will begin to need and look for solutions to their problems, both present and future. My sense is that creating potential solutions for corporate implementation places one in a good position once the market shift occurs. They’ll need to react in some way (call me cynical, but my perception is that most companies react instead of plan) and will consider any solutions which are readily available.
So on the one hand we can wait for companies to wake up and realize the position they’re in based on the metrics they traditionally recognize, e.g.: market demand, money, etc. Or we can begin to actively stimulate demand from within the market, applying pressure from the bottom up.
In the middle seems to be the market, and any amount of education and incentive we can give them would seem to help both the top-down and bottom-up approaches.