Category Archives: IPCC

Insurers Increasingly Focus On Climate Change Risks

I learned about my now good friend, the esteemed climate scientist Dr. Ben Kirtman here at the University of Miami, by reading his work within the IPCC Report when I was 13. In the years since he’s been someone that I’ve greatly admired and look up to but he’s also just about the nicest person you can imagine.

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So nice, in fact, that he was kind enough to meet with me all of those years ago as I was just starting The Sink or Swim Project and boy was my time with him that day impactful. I don’t know if he knows this or not but Ben was the first person I ever interviewed about climate change (talk about starting in the deep end of the pool with one of the world’s top scientific minds!). And, true to form, upon hearing that I’d never been on campus at the Rosenstiel School of Marine & Atmospheric Sciences, the place where I will soon graduate, he insisted he give me a tour of the place. For a little girl who was in love with marine science and already dreaming of attending the very school he worked at it was pretty tall cotton as they say, and all these years later I am as appreciative today to him as I was that first afternoon we met.

Now I will also share with you that during our time together that day we covered a lot of important topics. Ben’s insights certainly confirmed my interest in working on our climate crisis much less the plight places like South Florida face as rising seas threaten their very existence. When, for example, we talked about the threat that rising seas present to animals Ben responded by saying “Although I am not a biologist I am pretty sure that the polar bears are in trouble”. His answer sparked an idea that I then turned into a comic book, Where Will All The Polar Bears Go?, that I  wrote, illustrated, and have shared with tens of thousands of children during my public lectures in the years since.

Ben and I also talked about the challenges those who are so deeply concerned about our warming climate often face by others who are either unaware of the issue or somehow dismiss it. In explaining what could be done about folks who overlook or deny the issue and how we go about changing that before places people love, say the Everglades or Florida Keys, are lost forever, Ben said something I’ve never forgotten. When I asked him what he felt it would take to be or become the tipping point that would lead to widespread and aggressive action he explained that he felt that insurance companies and lenders would one day force solutions or would simply no longer offer some consumers coverage on their homes and businesses or, for that matter, a mortgage loan.

Of course, that made total sense. Insurers typically write a policy that’s six or 12 months in duration but when the time comes, and without serious action on our part that time will certainly come, they will stop writing coverage on a risk that’s sure to present them a claim. Mortgage lenders likely have an even greater risk since most home loans last 15 to 30 years. The lender today that is not paying close attention to the risk from flooding in a place like South Florida is the lender that will hold a mortgage on a home or business that’s under water in the decades to come.

And so with Ben’s insight all of those years ago in mind the article that follows caught my attention. The following is from an industry trade periodical called the Insurance Journal and as you will see it outlines a recent publication, the Climate Change Risk Assessment Report by the Geneva Association Task Force. The report considers a variety of risks related to climate change including the need to formally factor those risks into their predictive modeling, underwriting and strategic business decisions.

Ben was, of course, right. The day will soon come when insurers (and lenders too, you can be certain) take our climate change crisis into consideration when it comes to offering insurance or the price they charge.

In fact, based on the group of insurers on the task force, a who’s who of giant global insurers, I’d say the day, just as Ben so correctly predicted would happen, has already arrived. Now the question is what will our society do to not only mitigate the problem but actually address it’s foundational cause,fossil fuel production and use?

Insurance climate change task force warns of short, long-term risks: report

By Rebecca Gainsburg, Advisen

The insurance industry has taken promising first steps to understand climate change risk through decades of natural catastrophe modeling, analysis and pricing, but uncertainty surrounding future changes to public policy, litigation, technology and human behavior calls for a more holistic approach.

Insurance experts from 17 of the world’s largest property/casualty and life insurers joined forces to launch the Geneva Association Task Force and proactively publish a climate change risk assessment report in February.

“Insurers are obvious, strong leaders on global climate action, given their core functions – managing risk and investing – and our industry-led initiative demonstrates that they are proactively rising to the occasion,” said Jad Ariss, managing director for the Geneva Association.

By factoring climate change risk into underwriting decisions and choosing investment strategies that support climate change mitigation, insurers and reinsurers already contribute to the low-carbon economy transition. However, many difficult decisions still lie ahead regarding physical and transition risk in both the short- and long-term.

Physical risks from wildfires, droughts, and other extreme weather events will likely be similar in the next 10 years to what they are today. In the longer term (2030 to 2050), the Geneva Association said it anticipates an increase in the frequency and severity of extreme weather events and more significant consequences from rising sea levels, including prolonged heat waves and droughts, increased flooding of coastal areas, the spread of disease, and other geopolitical consequences.

Transition risks include societal and public policy efforts to mitigate climate change. They may result in increased climate change litigation, changes to the transportation and energy sectors, and an increasingly volatile valuation of assets in carbon-intensive sectors in the short-term. Long-term transition risks will largely depend on how much action is taken in the short-term, and the interconnection between transition and physical risks shouldn’t be ignored. 

“If society is able to accelerate the transition by taking actions to reduce carbon emissions and thereby global warming, it may reduce the extent to which acute and chronic physical risks materialize. Conversely, an absence of action by society is likely to lead to more severe global warming and physical risks,” the Geneva Association said in its report.

Developing the proper methodologies and tools to properly understand, mitigate, and underwrite climate change risk takes time and reaching a consensus is often difficult, but collaboration between insurers, scientific communities and other experts could speed the process.

Currently, the goal is to boost “awareness of the risk, the importance of investing in developing assessment capabilities and experimenting with different approaches and engaging in dialogue to promote cross-learning,” according to the report.

“This initiative is taking the insurance industry’s climate action and collaboration to the next level. Building on lessons learned from previous pilots and initiatives, our task force is focused on advancing climate risk assessment and scenario analysis anchored in companies’ decision-making,” said Maryam Golnaraghi, the association’s director of climate change and emerging environmental topics.

Members of the task force include Achmea, Aegon, AIG, Allianz, Aviva, AXA, Chubb, Daichi Life, Hannover Re, Intact Financial, Manulife, MetLife, Munich Re, Prudential Financial, SCOR, Swiss Re, and Tokio Marine.

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10,800%

Getting 200 of the world’s nations to agree on the steps needed to shift away from mankind’s century-long love affair with fossil fuels to clean, sustainable solutions might be the largest task humanity has ever undertaken together. As hard as I imagine it was to recover from devastating world wars and any number of horrible historic humanitarian crises, these could look small in dollars and the fortitude it will take for the citizens of the world to work together to solve our global climate crisis before it’s too late.

And because of that, the work that the United Nations is doing to address our climate crisis, including the recent Conference of the Parties (COP) in Madrid, is important for many reasons including:

2019 was the year that the University of Oxford’s Oxford University Press named “climate emergency” as its “word” (phrase) of the year after the use of those two words increased 10,800% between September 2018 and September 2019. Five or six years ago when I began my climate change work here at The Sink or Swim Project many people were unaware that earth was warming, much less the key reasons for these changes and their repercussions. As 2020 begins it’s clear that whether from Oxford University, research by Yale University or other sources, people all over the world now know that we have a problem and are increasingly being subject to its impact.

2019 was also the year that the United Nations issued its most recent forecast on earth’s temperatures and whether our society is doing enough, fast enough, to offset the worst impacts of our climate change crisis. In October, 2019 the IPCC illustrated that we are not making the type of progress needed to sufficiently influence future warming including the 2015 Paris Agreement’s goal of limiting warming to 1.5 degrees Celsius. You can review that report by clicking here.

Led by the United States in Paris in 2015, the world’s nations, nearly 200 of them, agreed that society must keep global warming under 2 degrees Celsius versus pre-industrial revolution levels and set a goal to work together to keep temperatures from rising no more than 1.5 degrees. The recent United Nations’ report, and the pathetic results from COP 25 in Madrid, again illustrate just how hard it will be to achieve these goals and the importance that the nations of the world have measurable goals and rules needed to attain them if we are to ever solve this crisis.

What was accomplished during two weeks of climate discussions in Madrid?

Not much.

“Once again, no progress has been made to bring countries more in line with the 1.5 degrees target of the Paris Agreement. Very strict rules are an absolute necessity and old untrustworthy CO-2 credits have to be scrapped. That has not happened in Madrid, the summit ended without a deal.”

Bas Eickhout, European Parliament Member

The United States is the second largest emitter of greenhouse gases in the world today (and historically has been the largest), yet our current President, calling it a “bad deal,” has announced that our country will withdraw from the Paris Agreement this year. Lacking the United States’ vision, deep engagement and leadership in solving the crisis, the world is a different place today than it was in 2015. Words like “failure” and “disarray” are being used to summarize the outcome in Madrid.

I am disappointed with the results of #COP25. The international community lost an important opportunity to show increased ambition on  mitigation, adaptation & finance to tackle the climate crisis. But we must not give up, and I will not give up.

António Guterres, United Nation’s Chairman, December 15, 2019

And while many of the world’s biggest nations – Australia, Brazil and, sadly, the United States – seem intent on “kicking the can down the road” as they say, doing little or consciously overlooking the issue, the people that I talk to at my lectures and other events are intent on learning, are openly wondering about what will happen, craving leadership and increasingly express being worried. I am worried too and the lack of progress at a global meeting on the climate change crisis that draws nearly 200 nations yet gets little done should concern us all.

Speaking of Oxford as I was, the University wrote in November, 2019 that 70% of British citizens live in areas which have already declared a climate emergency.

70% (!).

In one country.

In 2019.

Keeping in mind that the repercussions from our warming climate have only just begun and are about to get far worse without significant action by you and me and our governments, it is not surprising that a recent poll found that 52% of people in the United Kingdom are “very concerned” about climate change. What’s significant about that poll and figure is that just five years ago only 18% were “very concerned”.

People are listening. Reading. Learning.

Sure, the lack of meaningful action in Madrid is disappointing, but there are encouraging signs all around us that a world-wide movement, one often led by the youngest in society, to address this crisis is not only alive and well but growing. Significantly growing. No matter what you hear from politicians in Washington, San Paolo or other places intent on protecting the polluters, don’t overlook the use of the phrase “climate emergency” increasing by 10,800% in a year’s time or that the number of people in an entire country that call themselves “very concerned” about that very same emergency would triple in five years time.

People are starting to see the effects.

They are starting to widely understand that the world must come together to solve this problem.

And we, and by “we” I mean all of us with voices and votes and currency and feelings the world over, are finally on the verge of demanding that all political and business leaders understand the climate emergency and are focused on fixing it.

No more meetings that do nothing. Otherwise those so called “leaders” will need to understand that we will replace them and/or boycott their products and services in favor of those who are serious about solving the issue and that’s not intended as a threat or “big” talk or what-not.

It’s reality.

It’s what 10,800% tells me.

That percentage and these other figures illustrate that we are leaving an era of early education, one of tolerance, and are now entering an era of action because people increasingly know that the “climate emergency” is upon us and that the time to fix the problem has arrived at the dawn of the new decade that is 2020.

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