Analysis of 330 of America’s largest insurance companies found that while a few are showing strong leadership to address the threats climate change poses, the majority of them are unprepared to face risks and opportunities arising from the unpredictability of climate events.
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The research, led by responsible investors network Ceres, looked at governance, risk management, investment strategies, greenhouse gas management and public engagement data disclosed by companies.
Mindy Lubber, president of Ceres, said, “Despite being on the ‘front line’ of climate risks, most of the company responses show a profound lack of preparedness in addressing climate-related risks and opportunities.
“A big positive in the report’s findings is the strong leadership among a small number of property and casualty insurers – a trend that needs to become far more mainstream if the industry is to accelerate global responses to this colossal threat.”
Among those that are leading the way on climate risks are ACE, Munich Re, Swiss Re, Allianz, Prudential, XL Group, The Hartford, Sompo Japan and Zurich. But 276 of the 330 companies were found to be unprepared and to take minimal action on climate change.
There has been increased concern over the impact of extreme weather on the insurance and reinsurance sectors, given the already huge losses caused by natural disasters. Earlier this year, insurers Lloyd’s of London said the industry must incorporate climate change into its models to avoid huge financial losses.
“Rising value concentrations in cities, new growth regions, and ever-greater risk accumulations, have combined with climate uncertainty to make the management of natural hazards an increasingly critical issue,” said Tony Kuczinksi, President and CEO of Munich Re America.
“For this reason, climate change presents complex risks to the property and casualty insurance industry, but it also presents a number of business opportunities. We see tremendous opportunity for our industry to take a leadership role in addressing climate change by delivering solutions that not only transfer risk but incentivize its reduction.”
Rating agency Standard & Poor’s (S&P) recently said that reinsurer are not given enough importance to the risks climate change poses to their activities.
Photo: Eva Schuster via freeimages