Global Warming A U.S. Insurers' Trade Secret?

U.S. insurers' low profile on the topic of global warming is most likely due to business rivalry, in the opinion of a brokerage executive.

"Educating a competitor about how risky something is is not necessarily in your best interest," commented Chris Treanor, president and chief executive officer of Mercator Risk Services in an interview yesterday.

On Feb. 20, when 100 major firms signed a Global Roundtable on Climate Change statement urging governments to act to limit global warming and greenhouse gas emissions, Allianz, Swiss Re, Munich Reinsurance and other European concerns were highly visible, but only broker Marsh & McLennan Cos Inc. signed the measure from the United States.

Mr. Treanor, who comments frequently on insurance issues, said U.S. insurers perhaps have an interest in global warming, "but not the interest in talking about it."

European-based global reinsurers, he said, have an interest in educating their customers about global warming because the subject brings business their way.

"I don't think Swiss Re is thinking altruistically. They see it as a value to their customers," commented Mr. Treanor.

From a broker's perspective, he said, there is a value in heightening customer awareness of issues associated with global warming such as the expectation of increased windstorm activity.

In the case of his own New York-based wholesale brokerage, he said the firm sees an increased need for windstorm coverage and has reacted by hiring staff with expertise in global warming-related areas and finding ways to solve related issues for retail brokers.

As he sees it, all brokers "whether they are doing it prospectively or reactively" are opening offices and selling themselves as experts in windstorm coverage.

The insurance industry, Mr. Treanor noted, is always chasing "the next thing" either through intelligent forethought or reaction to the marketplace.

Perhaps the most visible U.S. insurers' reaction to global warming is the National Association of Mutual Insurance Companies new Web site http://climateandinsurance.org, which posts news related to global warming.

Nancy Grover, a NAMIC spokeswoman said the organization's aim with the site is "to get a dialogue going on how this [global warming] affects the insurance industry and how the industry could or should respond."

She said NAMIC is not taking any position on the possible causes of global warming and "getting into a political debate on whose fault it is."

"I wouldn't agree that insurers here are ignoring the issue, but Europeans are a couple of years ahead of us on this one," said Ms. Grover.