Tag Archives: insurance

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29 November 2017, Geoff Summerhayes, Executive Board Member, Australian Prudential Regulation Authority. The Weight of money: A business case for climate risk resilience. Tonight will be the first time I’ve substantially addressed APRA’s thinking around climate risk since a speech I delivered to the … Continue reading →

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28 November 2017, Moody’s Investor Service, The growing effects of climate change, including climbing global temperatures, and rising sea levels, are forecast to have an increasing economic impact on US state and local issuers. This will be a growing negative credit factor for issuers without sufficient adaptation and mitigation strategies, Moody’s Investors Service says in a new report. The report differentiates between climate trends, which are a longer-term shift in the climate over several decades, versus climate shock, defined as extreme weather events like natural disasters, floods, and droughts which are exacerbated by climate trends. Our credit analysis considers the effects of climate change when we believe a meaningful credit impact is highly likely to occur and not be mitigated by issuer actions, even if this is a number of years in the future. Climate shocks or extreme weather events have sharp, immediate and observable impacts on an issuer’s infrastructure, economy and revenue base, and environment. As such, we factor these impacts into our analysis of an issuer’s economy, fiscal position and capital infrastructure, as well as management’s ability to marshal resources and implement strategies to drive recovery. Extreme weather patterns exacerbated by changing climate trends include higher rates of coastal storm damage, more frequent droughts, and severe heat waves. These events can also cause economic challenges like smaller crop yields, infrastructure damage, higher energy demands, and escalated recovery costs. Read More here

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15 November 2017, Unfriend Coal, Our new scorecard was released today, finding that most insurers are still failing to take action on coal to prevent dangerous climate change. Leading insurance companies have pulled $20 billion out of investments in coal and a growing number are refusing to underwrite new coal projects, reveals a new scorecard on the industry from the Unfriend Coal campaign. Zurich announced this week that it will divest from and cease offering insurance to companies which depend on coal for more than 50% of their business. It now has some of the strongest policies on the scorecard, which rates 25 of the world’s biggest insurers on their action on coal and climate change. Swiss Re and Lloyd’s have also informed Unfriend Coal that they will announce new policies in the coming months. In all, 15 insurers with over $4 trillion in assets have now taken or are planning action on coal, divesting an estimated $20 billion in equities and bonds or ceasing to underwrite projects, finds Insuring Coal No More: An Insurance Scorecard on Coal and Climate Change. But although the shift away from coal is growing, these early movers still need to do more, and most insurers have yet to do anything to prevent the risk of dangerous climate change. The scorecard finds that no U.S. insurer has taken meaningful action, nor have major European companies such as Generali, Hannover Re, Chubb and Mapfre. Coal is the biggest single source of CO2 emissions and insurers are uniquely placed to support the Paris Agreement commitment to keep climate change well below 2 degrees Celsius. Peter Bosshard, Unfriend Coal coordinator, said: “Coal needs to become uninsurable. If insurers cease to cover the numerous natural, technical, commercial and political risks of coal projects, new coal mines and power plants cannot be built and existing operations will have to shut down. Insurers also manage $31 trillion of assets, and by shifting investments from coal to clean energy they can accelerate the transition to a low-carbon economy. Read More here

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13 November 2017. Bloomberg, Big Insurers Brace for Perilous Future as Climate Risks Escalate. After one of the worst Atlantic hurricane seasons in history, the world’s biggest insurers say the industry needs to get its act together if it wants to survive climate change. Insuring against weather natural disasters could reach unaffordable levels for households and companies, while the potential damage is so unpredictable it may be impossible to model — an unacceptable risk to insurers. “Sometime in the future there will be the situation where people cannot afford any longer to buy catastrophe insurance — this is what we want to avoid,” Ernst Rauch, the head of the Corporate Climate Centre at Munich Re. The world’s largest reinsurer suffered a 1.4 billion-euro ($1.63 billion) loss after hurricanes Harvey, Irma and Maria sent claims soaring. Contrary to Warren Buffett’s view that climate change will spur demand for coverage and boost profit at his insurance companies, the risk is the opposite unfolds as shifting weather patterns render disaster-prone areas uninsurable. Finding ways to prevent this is on the agenda of United Nations-backed climate talks in Bonn, Germany this week. The onus of bearing the expense of rebuilding after hurricanes, floods and earthquakes already falls disproportionately on governments. Insurers are on the hook for only about 10 percent of $75 billion of damage in Texas caused by flooding after Hurricane Harvey, according to AIR Worldwide. That’s because most standard U.S. home insurance policies don’t cover flooding. It’s a similar story in Fiji, hit last year by its worst cyclone ever, where less than one in ten people own insurance. “It’s a big concern of Swiss Re that there’s such a huge gap between the economic losses and what is insured,” said Peter Zimmerli, the head of atmospheric perils at Swiss Re, the second-biggest reinsurer. “Some of the signals of global warming are just there — they can’t be debated any more.” Read More here