The biggest buzz at the RIMS conference here in San Diego this week was about the threats and opportunities prompted by climate change. Zurich, Aon and other major players touted ambitious environmental initiatives. The chairman of Lloyd's, Lord Peter Levene, even took a side trip to Sacramento to meet with California Gov. Arnold Schwarzenegger to talk about the impact of global warming. Is this all a lot of hot air, or a long overdue response to the most serious threat our planet faces?
“The most important thing is to get people's attention and get them to understand this is something they need to deal with, without knee-jerk reactions,” said Lord Levene. “[Global warming] is there–we know it's a problem. The experts will argue about how big a problem it is and how much damage it's going to cause. You can make things change and every little bit helps.”
He added that, I know [Gov. Schwarzenegger] is very passionate about global warming, and global warming and climate change are very important to us at Lloyds.” So the meeting was a good opportunity to talk through those issues.
Lord Levene took the opportunity to call the governor's attention to “ClimateWise principles” in the United Kingdom, providing a framework for insurance companies globally to build climate change considerations into their business operations. The principles were developed following consultation between The Prince of Waless Business & the Environment Program, Lloyds, and other London insurance market participants.
But Lloyd's was far from alone here with its emphasis on climate-related issues. Zurich had a press conference here yesterday led by Lindene Patton, someone with a new age title–chief climate product officer–to talk about the carrier's program to help risk managers deal with new exposures related to pollution control.
“These unique liabilities create unique opportunities,” she said, citing a number of new coverage options being rolled out by Zurich, such as political risk coverage for carbon credits, new D&O covers for climate-related lawsuits, “green wrap” policies for green building projects, and various coverages for a wide array of alternative energy projects, such as wind and solar power. The carrier is also considering whether to offer energy conservation insurance and carbon capture and sequestration coverage.
Ms. Patton–a lawyer and certified industrial hygienist with a degree in biochemistry and a master's in public health–was appointed to her new post after 12 years with Zurich, including hands-on experience with standard environmental liability. She says one of her biggest roles will be educational–both internal and external.
Indeed, her goal is to work with underwriters and marketing officials at Zurich, as well as agents, brokers and risk managers, to help everyone understand the emerging exposures posed by climate change, and how risk management and insurance can best respond.
ACE also cited its own recently introduced “green” policy at a wide-ranging press briefing here. The coverage pays the extra costs of adding environmental protection features when repairing or reconstructing a damaged building.
Interestingly, the coverage is available as an endorsement on an existing ACE property program, or can be added as a stand-alone, wrap-around to another carrier's property policy (a nice way to get in the door to take the entire account at some point). The cover includes certification costs so the rebuilding earns the coveted “green” seal of approval.
Meanwhile, Aon hosted a panel here at RIMS on “sustainability,” which the brokerage defined as “forcing companies in all sectors to shift from a single-minded focus on the financial bottom line, to a more holistic business view that encompasses economic, social and environmental factors, while considering changing and multiplying regulations worldwide.”
Among the hot-button topics was international environmental compliance standards on carbon and greenhouse gas emissions. That, more than anything else, will likely propel climate change higher up the risk management agenda, as it won't be much longer before regulations start piling up to ease the impact of global warming, making this less the exotic risk it still is today, and more of a mandatory part of every insurance and loss control program.
I know there are those who think fears of global warming is a bunch of hooey, but I for one don't believe we can afford to wait around and do nothing, not with the increased frequency and severity of hurricanes and the devastation caused by changes in rain and temperature patterns worldwide of late.
In any case, any good risk manager or insurer would agree that it's better to be safe than sorry, right?
What do you folks think?
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