Will Insurers Lead the Way to Change in Environmental Policy?

Weather- and climate-related economic losses cost the world $200 billion in 2005 -- by far the biggest yearly loss on record. That big number falls squarely on the insurance industry, which foresees even bigger losses in the years ahead as global climate change leads to more volatile weather patterns.

The insurance industry is considering how public policy could be changed to control global warming and perhaps lessen the risk of catastrophic weather events. To that end, insurers are dusting off a decade-old study written by the Lawrence Berkeley National Laboratory, with funding from the US Department of Energy, which states:

Energy consumption is the largest contributor to global climate change, so promoting energy efficiency is a particularly promising strategy. Many energy-efficient technologies also have the potential to reduce ordinary insured losses involving property, health, or liability. This report illustrates 60 specific ways in which targeted energy-efficiency improvements can translate into reduced risk of insured losses. The measures can reduce losses from: fire, ice, wind, and water damage; temperature extremes; occupational injuries; poor indoor air quality; equipment performance problems; and uninsured drivers. These loss-reductions translate into benefits for a variety of insurance providers, including property-casualty, professional liability, health, life, workers' compensation, business interruption, and automobile.

Some insurers are already requiring their corporate clients to disclose their conservation policies before writing new policies. Additionally, expect the insurance lobby in Washington to pitch pro-environmental positions to members of Congress... not just because saving the environment is a good thing to do, but because it's sound economics.

Source: WorldChanging