Good News, Major Insurance Companies Recognize Climate Change is Happening…But will that make a difference?

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How will insurance companies handle increased risk of disasters, like flooding?

During the Q&A session I asked speakers at a March 19, 2015 Weston Sustainability Round Table about insurance and climate change.  Did insurance companies have the clout, perspective and willingness to advocate strategies that reduce the magnitude of climate change?  Would such businesses support a carbon tax?  For the record, “murky” seemed to characterize the situation as they described it.  Their answer parallels comments made by an Insurance industry expert who spoke on a Citizen’s Climate Lobby monthly conference call in 2014.  According to both presentations, insurance companies, and reinsurance companies in particular, recognize the reality of climate change and its human causes.  Unfortunately they have not, and likely will not, advocate for mitigation strategies (policies and techniques that dramatically reduce carbon pollution) to reduce the size of climate change.  Instead they will continue to modify their business models so they continue to make money.

That seems to mean they will assess and adapt to changing risks with tactics like higher premiums, higher deductibles, more exclusions and more property owner precautions.  More likely than not, they will at best advocate for adaptation strategies (e.g. better sewers and other flood control infrastructure).  Practically speaking, mitigation strategies such as Revenue Neutral Carbon Fee and Dividend, while good for humanity overall in the long run, won’t likely save the companies any insurance claims payouts in the next 10-30 years .   Steps today to  reduce green house gas emissions and carbon pollution won’t eliminate the impacts of climate & weather changes already happening due to current  levels  in the atmosphere.  Lobbying for mitigation, for cures to climate change, instead plunges them into a political firefight without improving next quarter’s, next year’s or even next decade’s profits. Lobbying for adaptation, on the other hand,  avoids politically contentious questions of human cause and responsibility while keeping them profitable for the time being.  It reduces the amount of damage and associated insured costs from the inevitable climate change induced extreme weather events.

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