Insurance companies have been quietly pushing the climate activist line for quite some time. Munich Re has published numerous reports regarding Xtreme Weather. Most of the reports have gaping holes, which scientists like Roger Pielke Jr. have been busy debunking for more than a decade. But they remain heavily engaged on the issue.
The U.S. National Association of Insurance Commissioners is meeting in New Orleans next week and by all accounts, the working group on climate change is the must-see event.
The froth at the top of the wave is a movement to start disinvesting in fossil fuel companies. The premiums you pay insurance companies are invested while waiting for claims to come in. If the claims don’t come in they keep the cash. Or stocks. And a lot of the stocks they invest in are tainted by association with demon fuel. (Don’t bet on this producing anything more than noise. Fossil fuel companies (apart from a few Western coal companies) are very profitable and will continue to be so for the next 50 years. They are also good clients of insurance companies who might be reluctant to offend.)
The real meat of the meeting is explained here:
“The group’s listed “2016 Charges,” along with their degree of importance, are as follows:
- Review the enterprise risk management efforts by carriers and how they may be affected by climate change and global warming.—Essential
- Investigate and receive information regarding the use of modeling by carriers and their reinsurers concerning climate change and global warming.—Important
- Review the impact of climate change and global warming on insurers through presentations by interested parties.—Important
- Investigate sustainability issues and solutions related to the insurance industry.—Important
- Review innovative insurer solutions to climate change, including new insurance products through presentations by interested parties.—Important”
It’s fairly clear that the impacts of climate change on insurers to date are negligible. And while I laud their efforts to prepare for the future, I worry that they might in effect confront us with a sucker bet–one which only they can win. If they charge higher premiums for climate risks on conventional weather disasters, it will be up to the victims to prove that the disasters are caused by climate change–and we might then see the spectacular reversal wherein insurance companies start being… skeptical. If on the other hand they engineer new insurance products specifically for climate risks, they can collect premiums for decades before those risks become reality–at least, if you believe the IPCC.
In fact, I don’t think insurance companies are making stuff up or hiding the truth from us all. If climate change is a risk, managing it is what they do. But they certainly are not going to be at the forefront of questioning the impacts of climate change.
With insurance, the safest bet is that the house always wins. Insurance companies are of course interested in keeping it that way. That’s their job.