Paying out billions of dollars here and billions of dollars there has made the global insurance industry a believer in climate change, according to a new study that shows insurance companies are staunch advocates for reducing carbon emissions and minimizing the risk posed by increasingly severe weather events.
“Climate change stands as a stress test for insurance, the world’s largest industry with U.S. $4.6 trillion in revenues, 7% of the global economy,” writes Evan Mills, a scientist at the Lawrence Berkeley National Laboratory at the UC Berkeley campus.
The industry now pays an average of $50 billion a year in weather- and climate-related insurance losses, including property damage and business disruptions, Mills writes in a policy forum article in the journal Science. Such claims have been doubling every decade since the 1980s.
Superstorm Sandy, which ravaged the Eastern Seaboard, is just one recent example of the kinds of increasing liability posed by severe weather events in a changing climate, Evans said.
Insurance industry representatives from the United States, Europe and Asia have been working with scientists on the Intergovernmental Panel on Climate Change since the 1990s to better understand their exposure to risks associated with rising global temperatures, Evans said.
Members of the industry have taken a lead role in raising public awareness of global warming, supporting climate research, and mounting efforts to reduce greenhouse gas emissions by making their own operations more energy efficient, and through their investments in managing a $25 trillion portfolio, he said.
The study tallied 1,148 in climate change adaption and mitigation activities in 51 countries, totaling $2 trillion.
Such activities have grown since the 2008 onset of the global economic downturn. That shows the industry shuns political rhetoric that it cannot afford such measures right now, he said, and instead “believes it can't afford not to.”
“It’s not public relations,” Evans said in an interview. “It’s core to the business.”