Global warming could burn insurers

Friday, June 16, 2006

Global warming could burn insurers
Activists call on industry to act

The alarm sounded by scientists about global warming has deep implications for the insurance industry and consumers, participants said Thursday at a climate change summit in Seattle.

Businesses and governments can do more to reduce carbon dioxide, promote renewable resources and take other environmentally friendly actions that would benefit the world as well as their bottom line, corporate executives and politicians said.

Dramatic climate changes have the potential to affect nearly all segments of insurance coverage, including agricultural, health, life and business, said Andrew Logan, program manager of CERES, a Boston-based national network of investment funds, environmental organizations and other public interest groups.

Natural and manmade catastrophic events have steadily increased since 1970, with eight of the 10 most expensive disasters in U.S. history occurring in the past four years, he said.

New insurance models predict significantly higher losses in the next five years.

"The pressure on primary insurers will increase as their business partners and stakeholders grow increasingly concerned," Logan said.

He recommended that insurers analyze climate change data and disclose it to investors, engage policymakers and regulators, and improve loss prevention and mitigation efforts.

As part of its corporate social responsibility plan, Starbucks identified its "carbon footprint," discovering that its operations produced 255,000 tons of carbon dioxide in 2003, said Ben Packard, the company's environmental affairs director.

Starbucks has set goals to annually increase its use of renewable energy, to conserve energy and to advocate that others do the same.

Through messages to its 100,000 employees worldwide, and more recently through a series of full-page advertisements in The New York Times, "we're trying to use our voice, our reach" to encourage people to think and act green, Packard said.

Primary insurers have been relatively silent on the issue of global warming, said Nancy Skinner, U.S. director of The Climate Group, a non-profit organization based in the United Kingdom that promotes business and government leadership on climate change.

Those insurers say, "If this really is a big concern, why haven't regulators expressed any interest?" she said.

One of those who has is state Insurance Commissioner Mike Kreidler, who convened Thursday's summit.

While "the jury is still out" on how insurance companies view the impact of climate change, the industry will be seriously affected, Skinner said.

She encouraged insurers to "clean up your own house" by taking steps to improve their carbon footprint.

Among other steps, she said the industry should promote business and personal activities that reduce carbon dioxide and save energy, invest in low-carbon and renewable energy technology and increase public awareness.

"I invite you all to be leaders in your sector," Skinner said.

P-I reporter John Iwasaki can be reached at 206-448-8096 or johniwasaki@seattlepi.com.

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