The California Department of Insurance and the United Nations Environment Program have launched a yearlong effort to develop a sustainable insurance roadmap to confront California's climate risks.
This is the first time the United Nations has partnered with an American state to create a sustainable insurance strategy and action plan intended to tackle the growing risks of climate change. Last year, California experienced the deadliest and most destructive wildfires in the state's history, resulting in more than $12 billion in insured losses, making it the world's costliest disaster.
“We have a historic opportunity to utilize insurance markets to protect Californians from the threat of climate change, including rising sea levels, extreme heat, and wildfires,” California's insurance commissioner, Ricardo Lara, said in a statement. “Working with the United Nations, we can keep California at the forefront of reducing risks while promoting sustainable investments.”
“A sustainable insurance roadmap will enable California to harness risk reduction measures, insurance solutions, and investments by the insurance industry in order to build safer, disaster-resilient communities and accelerate the transition to a low-carbon, sustainable economy,” added Butch Bacani, who leads the U.N. Environment Program's Principles for Sustainable Insurance (“PSI”). “With Commissioner Lara's vision and leadership, we look forward to working together with insurers and key stakeholders to drive ambitious climate action now, in line with the aims of the Paris Agreement on Climate Change.”
California is the largest insurance market in the United States, and one of the largest in the world. The California Department of Insurance (“DOI”) was one of the first insurance regulatory and supervisory authorities in the world to sign the PSI and commit to tackling global sustainability challenges such as climate change, biodiversity loss, and ecosystem degradation, pollution, and social and financial exclusion.
The DOI explained in a statement that the California Sustainable Insurance Roadmap is envisioned to pave the way for innovative risk management, insurance, and investment solutions that reduce climate risks and protect natural ecosystems. For example, new insurance products could be developed to promote cooler streets and renewable energy. In other countries, insurance solutions for coral reefs and mangroves are emerging as these natural ecosystems have been proven to significantly reduce wave energy and buffer storm surge, reducing flood risk and protecting communities. In this vein, insurance solutions for California's protective, life-supporting natural infrastructure – such as wetlands and forests – could reduce climate and disaster risk and present new opportunities, according to the DOI.
The DOI said that, together with the PSI, it will engage insurers and reinsurers, public policy leaders, environmental NGOs, researchers, and risk management experts on this major collaborative effort to make California's communities and economies resilient, inclusive, and sustainable.
Learn more: www.insurance.ca.gov; www.unepfi.org/psi.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].