Climate Change Action Debated At WIF Session

NU Online News Service, March 16, 4:14 p.m. EST

While some insurers are taking action to cope with climate change, there is a public perception that the industry is an obstacle to dealing with the issue, insurance professionals said.

Speaking at the World Insurance Forum in Bermuda, Peter Hoeppe, head of geo risks for Munich Re, took issue with statements that insurers have not been present in the climate change debate. He cited various initiatives at Munich Re to show that the industry has been involved, including heavy investments in renewable energy to reduce emissions some say are raising temperatures.

Michael Butt, chairman of AXIS Capital Holdings Limited, said even though some insurers are taking action, the public does not understand what the industry is doing, stating that the public feels insurers are there to take advantage, rather than contribute to climate change solutions.

"We still have some progress to make in general terms," he said.

Rolf Tolle, former franchise performance director, Lloyd's of London, agreed, noting that the industry is not organized well enough. He said the industry would be better served if it could overcome differences and work in a more unified manner with politicians and society on the climate change issue.

Mr. Hoeppe explained that a "one voice" approach would imply that there is one opinion of climate change in the industry and he said that is not the case.

Mr. Tolle, though, said the industry should not wait until there is certainty to get on board, stating that renewable energy makes sense from an economical standpoint as well as an environmental one.

Focusing on solutions and not the problem would be preferable, Mr. Hoeppe agreed, adding that there are other reasons to invest in and provide insurance solutions around renewable energy, including dwindling oil supplies. It would be cheaper to invest now than to delay, he said.

For the insurance industry, a risk-based pricing approach is crucial to involvement in climate change, Mr. Tolle said. The notion that people who are more exposed to the effects of climate change should be subsidized, he said, should be narrowly focused to people already in those areas.

Any new development, he said, should be priced based on the risk it poses, Mr. Tolle added, "When disaster strikes, we expect that [structures] will be rebuilt sensibly and sustainably."

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