The insurance industry will find itself disproportionatelybearing the impact of climate change if it doesn't find a way topartner with policymakers and stakeholders.

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Lindene Patton, chief underwriting officer for North AmericaP&C at Zurich Insurance Group, says climate change is “not [theinsurance industry's] problem alone.”

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Patton was part of a panel on climate change at the 23rd annualExecutive Conference, an event hosted by Ernst & Young andSummit Business Media.

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She says “there will be bottom”—that the industry will reach apoint when its ability to re-underwrite and exclude businessends.

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Insurance as a Societal Partner

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The role of the industry should be viewed more as a partner inreducing or mitigating climate change risks, rather than merely aninstrument that responds to pay for damages after they happen.

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The industry's intellectual capital can be offered as a tool inthe development of public policy and business solutions—a“mechanism to show where capital investments can always result in abenefit.”

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Patton introduced Zurich's “Risk Interconnection Map,” whichhighlights multitude of risks that manifest due to climatechange.

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“This type of information could be made available topolicymakers,” she says.

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Mark Way, senior vice president and head of sustainability atSwiss Re, says the industry has developed products “for thosewanting to minimize their climate change impact,” but theseso-called green policies “miss the point where we have the biggestimpact.”

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The industry needs to promote a “greater understanding of riskmanagement [and] how insurance fits into that—how insurance can bean effective component to increasing resilience,” Way says.

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Government needs to think more—with the help of the insuranceindustry—about risk-reduction if insurance is to remain readilyavailable.

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Lacking Innovation

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Bob Shine, chief underwriting officer for North America at XLGroup, says he doesn't think the insurance industry is terriblyinnovative.

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The public has to be willing to buy a product at a price thatmatches the risk in order for the insurer to make a return, hesays.

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“Investors like uncertainty less than insurers do,” says Shine,who adds that he feels the industry wants to respond but “tends toretreat and do what we know is safe.”

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The Most Dangerous Country in the World

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Likely the most frank talk about climate change came fromNicholas Coch, a professor of geology and forensic“hurricanologist” at CUNY Queens College.

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“Anyone who denies [climate change] simply can't read athermometer,” he says.

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He calls the United States—with its simultaneous risk ofhurricanes, earthquakes, volcanoes and tornadoes—the most dangerouscountry in the world.

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“During a normal time, we're in trouble,” the professor adds.“In a time of global change, we are in deep trouble.”

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Coch criticized the industry's “unrealistic reoccurrencefrequency.”

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“Frequency and consequences have to be considered together,” hesays. “[Superstorm] Sandy is not the big one.”

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