The Admiral, the Public, and the Insurance Industry

Three stories and three different perspectives on climate change.  An Admiral, the Australian electorate, the insurance industry - - the following three stories demonstrate the paradox and challenges in dealing with climate change and extreme weather events.  Is it a national security concern?  Can the public come to grips with the long-term issues of climate change?  Do insurance companies and other organizations understand the economic risks?

From the The Boston Globe:

CAMBRIDGE — America’s top military officer in charge of monitoring hostile actions by North Korea, escalating tensions between China and Japan, and a spike in computer attacks traced to China provides an unexpected answer when asked what is the biggest long-term security threat in the Pacific region: climate change.

Navy Admiral Samuel J. Locklear III, in an interview at a Cambridge hotel Friday after he met with scholars at Harvard and Tufts universities, said significant upheaval related to the warming planet “is probably the most likely thing that is going to happen . . . that will cripple the security environment, probably more likely than the other scenarios we all often talk about.’’

“People are surprised sometimes,” he added, describing the reaction to his assessment. “You have the real potential here in the not-too-distant future of nations displaced by rising sea level. Certainly weather patterns are more severe than they have been in the past. We are on super typhoon 27 or 28 this year in the Western Pacific. The average is about 17.”

From the Design Build Source:

Efforts to advance the sustainability agenda via fear-mongering have failed to achieve their desired effect, with public concern over climate change declining precipitously in just the past five years.

 

Speaking at the Green Cities environmental building conference in Sydney last week, economist Eric Knight observed that concern among the Australian electorate regarding climate change had undergone a sharp decline despite strenuous efforts by campaigners to raise awareness about the issue.

 

While well over half of voters considered climate change to be a factor which would impact their support during the Federal Election in 2008, this figure had plunged to around 35 per cent by February 2012 – a decline of 20 percentage points in the space of only half a decade.

 

Nine years of polling by the Lowy Institute show major fluctuations in attitudes towards climate change among Australians. In 2007 and 2008, it was considered one of the country’s top five foreign policy goals, yet by 2010 and 2011 it was considered the third least important on a list of 12 foreign policy priorities.

2012 was the warmest year on record in the lower 48 states and the second most extreme weather year in United States history. Insurers are increasingly acknowledging that extreme weather has become the new normal, yet a new report from Ceres finds that many in the industry are only just beginning to think about how to address the effects climate change may have on their business – while a small group of companies is leading the way.

From Ceres:

The Ceres report, Insurer Climate Risk Disclosure Survey: 2012 Findings & Recommendations, is based on 184 company disclosures in response to a climate risk survey developed by insurance regulators. Surveys were completed by insurers licensed to operate in three states – California, New York and Washington – that require climate risk disclosure. Collectively, these companies represent a significant majority of the American insurance market.

Ceres found only 23 companies in the property & casualty, life & annuity and health insurance sectors have comprehensive climate change strategies. Those companies provide a roadmap for the rest of the industry as it begins to wrestle with the issue.

“Every segment of the insurance industry faces climate risks, yet the industry’s response has been highly uneven,” said Ceres president Mindy Lubber, who wrote the report foreword. “The implications of this are profound because the insurance sector is a key driver of the economy. If climate change undermines the future availability of insurance products and risk management services in major markets throughout the US, it threatens the economy and taxpayers as well.”

“Climate change is potentially a serious financial threat to the insurance industry, and needs to be on insurers’ and regulators’ radar,” said Washington State Insurance Commissioner Mike Kreidler, a leading advocate for stronger climate risk disclosure and action by insurance companies. “If insurance is to remain available and affordable, companies will need to adapt. The last thing we want to see are unprepared companies simply pulling out of markets or seeking unreasonable rate hikes.”