While the effects of climate change will impact every segment of the business community, the insurance industry is especially at risk. Extreme weather events of the past several years have – in addition to their human toll – caused tens of billions of dollars in losses for insurers. Given development and population trends in high-risk areas, potential future impacts of global warming – such as sea level rise and increased storm activity and severity – could prove far more costly.
- There were four times as many natural catastrophes in the 1990s as there were three decades ago.
- Insured losses from natural disasters are 15 times higher today than they were in the 1960s, even after adjusting for inflation.
- The total dollars paid out in natural disaster-related claims since 1990 is 50 percent greater than the losses incurred over the past 40 years combined.
- People are moving to places like Florida at the rate of 1,000 per day, substantially increasing the value of the property in these high-risk areas.
What Can the Insurance Industry Do?
- Educate policyholders about financial risks associated with global warming.
- Support stricter building code enforcement and other measures that minimize the impact of severe weather.
- Promote energy efficiency and renewables to cut greenhouse gases and reduce losses from natural disasters.
- Lead by example as a voluntary member of EPA's ENERGY STARŪ Program and the Rebuild America Program.
EPA's Partnerships
The Risk and Insurance Management Society, Inc. (RIMS) 
and the U.S. Environmental Protection Agency have reached an agreement to develop a framework for addressing risk and insurance management issues relating to climate change. RIMS and the EPA signed a memorandum of agreement yesterday for developing the framework which will consider outreach, education, research and emerging mitigation and adaptation activities relevant to climate change.
The goal of the agreement is to improve overall understanding of climate change issues by industries and the government as well as increase awareness of the possible connection between climate change and the rapidly rising claims for losses from natural disasters. Companies working to reduce climate change risks will also benefit with better access to information and guidance on insurance oriented mitigation and adaptation opportunities.
"Climate change is an important environmental issue for property insurers and risk managers," said David Mair, RIMS president. "This agreement provides a vital opportunity for business and the government to meet organizational goals and at the same time meet the needs of the broader insurance community and the public."
RIMS president, David Mair, signed the agreement on behalf of RIMS on Wednesday, June 20, 2001 at 4:30 p.m. at the Hyatt Regency, Capitol Hill. The agreement will remain flexible enough to evolve as new knowledge and information on climate change becomes available.
Other Sites of Interest
Extreme Weather Sourcebook — this National Center for Atmospheric Research site provides quick access to data on the cost of damages from hurricanes, floods, and tornadoes in the United States and its territories. The Extreme Weather Sourcebook reports decades of information in constant 1997 dollars, simplifying comparisons among extreme-weather impacts and among states or regions.
Lawrence Berkley National Laboratory — this DOE sponsored site describes how increasing energy efficiency has the dual benefit of reducing insurance losses and mitigating global warming.
Surviving Disaster with Renewable Energy — this National Renewable Energy Laboratory sponsored site focuses on the role of renewables in emergency preparedness and response, disaster mitigation and relief, and sustainable development.
General Re — Provides a search engine dedicated to the insurance industry that returns links to information relevant to the insurance industry including natural catastrophes and other disasters.
Swiss Re Group — Swiss Re Research and Publications - Topical Areas - Explains Swiss Re's philosophy and provides links to environmental information, organizations and business initiatives and in-depth focus reports.