Extreme weather events cause significant property damage, injury, and loss of life. These events can even threaten the existence of some species. Given the documented increase in ocean temperatures and increasing evidence of melting icecaps, global concern for climate change is at an all time high. An increase in global temperatures is also occurring because of the rise of extreme weather and climate conditions such as hurricanes. Moreover, coastal regions face the prospect of severe flooding and associated damages.

Many expect that governmental and regulatory agencies will increase scrutiny over business practices, particularly in terms of a company's readiness to deal with climate change and related losses. In March 2009, the NAIC adopted the "Climate Risk Disclosure Proposal," which requires insurers to reveal how they manage climate change risk. Such regulatory requirements will likely continue to increase. Over time, stringent guidelines will result in greater pressure on insurers to better quantify, manage, and track their risk exposures related to large weather events and long term climate change. Organizations will need to enact risk selection and investment management programs, which should continue to factor in climate change-related risks on their books.

Insurers can take some key steps now to address these challenges. Some strategies are outlined below.