Covered for Climate Change
Even as the U.S. and Russian governments continue to question the global warming phenomenon, insurance companies treat it as a reality. Why? Because the market forces them to. As Matthew Paterson, a political studies professor at the University of Ottawa, observes: insurers’ "ability to predict the appropriate risk is tenuous," because weather patterns are so ...
Even as the U.S. and Russian governments continue to question the global warming phenomenon, insurance companies treat it as a reality. Why? Because the market forces them to. As Matthew Paterson, a political studies professor at the University of Ottawa, observes: insurers' "ability to predict the appropriate risk is tenuous," because weather patterns are so unpredictable. And the stakes are enormous: Weather-related disasters have, in peak years, cost the insurance companies more than the $21 billion bill for the Sept. 11, 2001, terrorist attacks.
Even as the U.S. and Russian governments continue to question the global warming phenomenon, insurance companies treat it as a reality. Why? Because the market forces them to. As Matthew Paterson, a political studies professor at the University of Ottawa, observes: insurers’ "ability to predict the appropriate risk is tenuous," because weather patterns are so unpredictable. And the stakes are enormous: Weather-related disasters have, in peak years, cost the insurance companies more than the $21 billion bill for the Sept. 11, 2001, terrorist attacks.
The industry — whose revenues, if measured as gross domestic product, are equivalent to the world’s fourth largest economy — has responded by pushing for global action on climate change and by fostering research. One leading insurer, Swiss Re, is cosponsoring a report on climate change, and the British insurer Aviva sponsors a climate change research award.
Other business interests, such as the oil and gas industry, are more skeptical of climate change research, but they have been lobbying as well. Andrew Dlugolecki of Britain’s Tyndall Centre for Climate Change Research notes that all the insurance companies have achieved so far is to check the efforts of business lobbyists at international climate change conferences. In the face of such obstacles, insurance companies have fallen back on the mechanisms they know best, including premium increases for coastal structures at risk from rising sea levels.
A few governments are listening, though. After intensive lobbying by the Association of British Insurers, the British government recently committed to an annual boost of more than $150 million to improve flood defenses. But those alarmed about global warming doubt that the actions of one government, or one industry, will be enough to stem the rising global tide.
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