Climate Change and Professional Consulting: An Insurance Perspective

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Wednesday, 20 January 2010: 9:00 AM
B214 (GWCC)
Kyle Beatty, Willis Re Inc., Minneapolis, MN; and S. Bennett and S. Smith

In its April 2009 report, the national investor network Ceres noted actions by 189 insurers, eight reinsurers, 20 re/insurance intermediaries, and 27 insurance organizations. The majority of this activity has been driven by property insurance companies. The report concluded, however, that progress by the industry as a whole is still in its infancy. In an effort to motivate action, the National Association of Insurance Commissioners (NAIC) will impose a mandatory requirement (beginning on May 1, 2010) that all insurance companies with annual premiums over $500 million must disclose to regulators and investors the financial risks they face from climate change, as well as actions the companies are taking to respond to those risks.

Through a combined 20 years of informal consulting with US-based insurance companies, the authors have observed that many US-based insurance companies have not yet assessed the risk climate change poses to their business model. These gaps are in part due to the companies' limited awareness of the science and/or the misinformation that is pervasive in the public domain. Increasingly, companies turn to consulting meteorologists and other professional consultants for primary information on climate change. It's important to recognize, however, that research methods in climate science are often foreign to highly skilled meteorologists and weather forecasters. This presents a challenge for the meteorological community when considering standards of professional responsibility in climate change consulting.

In response to the growing climate change awareness in the insurance industry and new disclosure requirements, Willis and the Scripps Institution of Oceanography have embarked on an educational alliance to inform this segment of the business community on the realities of climate change. In this presentation, the authors will describe the goals and key milestones of the initiative. The authors also suggest methods that consulting meteorologists can employ to understand and communicate the latest and most credible scientific information on climate change.