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Insurance Carriers Lead Climate Change Awareness

 

Although hurricane season has been fairly benign so far this year, the U.S. has experienced plenty of natural disasters in 2013. From the disastrous Oklahoma tornado to multiple wildfires started by storms and fanned by winds, and floods across the nation, Americans have had their hands busy dealing with natural catastrophes.

Even before 2013, many bore witness to a series of increasingly severe storms in recent years, including Hurricane Katrina, Superstorm Sandy, the Joplin tornado, and others. In 2012 alone, disasters caused $57.9 billion in insured losses, compared to the annual average of $27 billion in insured losses for the years 2000-2011.

Scientists grow increasingly more convinced that climate change intensifies destructive storms and plays an active part in turning them into national catastrophes. Precipitation has been more intense and more erratic, creating harshly distinct environments that are both hotter and more arid than usual and, conversely, rain damaged and flooded. Boston-based risk-assessment experts Karen Clark & Co. predict hurricane peak wind speeds could increase between 2% and 5% due to climate change, which could potentially cause up to 40% more property insurance losses, according to the Insurance Information Institute (III).

Another factor leading to greater insurance losses is overdevelopment in areas prone to storms, especially along the Atlantic coastline. In addition, building regulation changes in those areas and other factors increase rebuilding costs after a widespread event.

Large scale initiatives

Given the possibility of greater devastation and higher rebuilding costs, insurance carriers worry more than most about extreme weather risks. A huge disaster such as Superstorm Sandy could bite sharply into providers’ finances. That’s why insurance officials have been among the most outspoken business leaders about the dangers of climate change. By making public statements and reaching out to policy leaders, many providers have promoted lower greenhouse gas emissions and better energy solutions for years.

Larger carriers are currently:

  • Brainstorming ways to help the developing countries hit the hardest by catastrophes make progress in rebuilding.
  • Investing in renewable energy options.
  • Reducing greenhouse gas emissions within their companies and offsetting the remainder by engaging in reforestation efforts.
  • Introducing paperless billing and documentation as options for clients.
  • Encouraging clients to engage in more sustainable business practices.

Efforts close to home

Insurance carriers also invest in smaller scale practices that encourage environmentally friendly building and interactions.

Practices to encourage green homeowners:

  • Discounts offered for building with green materials, which also typically last longer and resist storm damage better.
  • Geothermal, solar, and wind energy generated by homeowners can be reimbursed in the event of a power outage.
  • The introduction of policies that allow homeowners to rebuild with green materials after a covered loss.

Practices to encourage green drivers:

  • Pay-as-you-drive programs: With these programs, carriers monitor the driving distances of individuals and award lower premiums to those who drive less.
  • Newer car discounts: New cars generally are safer and more fuel efficient, so some providers offer discounts to encourage safety and more moderate fuel use.
  • Work from home discounts: Inform your insurance provider if you work from home. No commute means fewer greenhouse gas emissions and possible discounts on auto insurance premiums.

It’s sometimes difficult to think of your insurance provider as an environmental ally, but in truth, carriers also suffer greatly during disasters. Insurance providers put major emphasis on environmental cooperation mainly because it’s the right thing to do. But it doesn’t hurt that it’s also good business.

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