For more information or to attend a telepresser on 10/22/14 at 10:00am, please contact Peyton Fleming at fleming or 617-733-6660.
Amid growing evidence that climate change is having wide-ranging global impacts that will worsen in the years ahead, Insurer Climate Risk Disclosure Survey Report & Scorecard: 2014 Findings & Recommendations, ranks the nation’s 330 largest insurance companies on what they are saying and doing to respond to escalating climate risks. The report found strong leadership among fewer than a dozen companies but generally poor responses among the vast majority.
This report summarizes responses from insurance companies to a survey on climatechange risks developed by the National Association of Insurance Commissioners (NAIC). In 2013, insurance regulators in California, Connecticut, Minnesota, NewYork and Washington required insurers writing in excess of $100 million in direct written premiums, and licensed to operate in any of the five states, to disclose their climate- related risks using this survey.
The aim of the survey, and Ceres’ analysis of the responses, is to provide regulators,insurers, investors and other stakeholders with substantive information about the risks insurers face from climate change and the steps insurers are taking—or are not taking— to respond to those risks. Because virtually every large insurer operates in at least one of the mandatory climate risk disclosure states, this analysis effectively opens a window into the entire industry. The report distills key findings and industry trends, and includes company specific scores based on disclosed actions taken to manage climate risks. It also offers recommendations for insurers and regulators to improve the insurance sectors’ overall management of climate change risks.
The report ranks property & casualty, health and life & annuity insurers that represent about 87 percent of the total US insurance market. The companies were ranked on a half-dozen climate related indicators, including governance, risk management, investment strategies, greenhouse gas management and public engagement (such as their climate policy positions.) The report is based on company disclosures last year in response to a climate risk survey developed by the National Association of Insurance Commissioners (NAIC).
The companies were ranked on a four-tier scoring system, based on a 100-point scale, that included “Leading,” “Developing,” “Beginning” and “Minimal” grades. Nine of the 330 companies – three percent overall – received the “Leading” rank, including ACE, Munich Re, Swiss Re, Allianz, Prudential, XL Group, The Hartford, Sompo Japan and Zurich. The Hartford and Prudential are the only U.S.-headquartered insurers among the nine firms. The vast majority of the insurers – 276 of the 330 companies – earned “Beginning” or “Minimal” ratings. The heath and life & annuity insurers had especially weak responses, with 89 percent and 80 percent, respectively, receiving the lowest “Minimal” rating. Three of the nine top scoring companies were global reinsurance companies, including Munich Re, Swiss Re and XL Group.
The report cites numerous studies and on-the-ground examples of how rising global temperatures are driving sea level increases, and more pronounced extreme weather events are causing larger damages and losses in coastal and non-coastal areas alike. The insurance sector is on the veritable ‘front line’ of these escalating financial risks, especially property & casualty firms, which often bear the financial brunt of extreme weather losses. Insured losses from Hurricane Sandy alone totaled more than $29 billion. The changing climate also has major implications for life & annuity insurers, especially in regard to their vast investment portfolios. L&A firms have trillion of dollars of investments – roughly two-thirds of the U.S. insurance sector’s total cash and invested assets – that may be affected by wide-ranging climate-related ripples across the economy, including physical impacts, carbon-reducing regulations and fast-growing clean energy opportunities.