on October 28, 2014 by admin in Insurance Industry, Comments (0)

Climate report gets insurance industry heated

A new report has angered some of the insurance industry’s leading players by giving 3 % of all companies a ‘leading’ ranking in terms of their preparedness for the challenges posed by climate change.

The 3 % of companies who were deemed ‘Leading’ include: ACE, Munich Re, Swiss Re, Allianz, Prudential, XL Group, The Hartford, Sompo Japan and Zurich.

The vast majority of insurers fell into the ‘Beginning’ or ‘Minimal’ rankings. The health and life annuity insurers surveyed received the lowest ‘Minimal’ ranking, 89 percent and 80 percent respectively, according to the report.

 “I would fundamentally disagree with the premise that the vast majority of insurers are unprepared for the challenges posed by climate change,” said Robert Hartwing, president of the Insurance Information Institute, speaking for the property/casualty industry and reinsurers. “The property/casualty industry and the reinsurance industry are and have been at the vanguard of managing climate-related risks for decades and in some cases centuries.”

To support that Hartwig noted there are nearly 300 P/C insurers in the U.S. alone that are a century old or older. To ensure their long survival insurers have built increasingly sophisticated catastrophe models, improved enterprise risk management models and they have kept a close watch on economic risks as well, he said.

Looking at insurer insolvencies since 1969, only 7 percent of those carriers can have their demise attributed to catastrophe-related losses, according to I.I.I.
By comparison 44 percent of insurer insolvencies are associated with insufficient loss reserves or inadequate pricing, and most of those insurers were in the worker’s compensation and medical malpractice lines, Hartwig said, adding, “They have nothing to do with climate change.”

“I think it’s unfortunate that it takes such a 90-percent-of-the-glass-empty approach,” explained David Kodama, senior director for research and policy analysis for the Property Casualty Insurers Association of America. “I do believe there is significant common ground that we can advocate on to raise our climate change consciousness level across the nation.”

The report, titled ‘Insurer Climate Risk Disclosure Survey Report Scorecard: 2014 Findings Recommendations,’ was conducted by Ceres and is based on a survey of 330 insurer disclosures last year.

The climate risk survey was developed by the National Association of Insurance Commissioners and constituted the representation of approximately 87 % of the US market in direct premiums written.

Article source: http://www.ibamag.com/news/climate-report-gets-insurance-industry-heated-20023.aspx

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