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MUNICH, Germany, October 25, 2006 (Refocus
Weekly)
Insurers in the United States could offer
incentives to homeowners who invest in renewable energy systems or
energy efficiency, suggests a major insurance firm and a leading
conservation group.
New business opportunities may emerge from environmental
remediation or new products that are designed to mitigate climate
change, explain the Allianz Group and World Wildlife Fund in
‘Climate Change & Insurance: An Agenda for Action in the United
States.’ Examples include new or customized insurance initiatives
such as ‘bundling’ or targeted marketing of existing insurance
products for developers of wind, solar, biomass and other renewable
energy technologies and projects that generate carbon credits within
emissions trading systems, it explains.
The report says climate change poses serious risks to insurers and
their customers in the U.S., and says insurers can do more to
address risks and ensure affordable coverage for consumers. It is
the first time that a major insurance company has released a study
of this kind in the U.S., and it examines scientific findings on
climate change to assess the potential impact on the insurance
industry and its customers.
Allianz has already announced its intention to invest US$600 million
in renewable energy projects over the next five years, and will
introduce an internet-based tool to help customers manage their
exposure to natural catastrophes.
Climate change has the potential to significantly alter and
intensify destructive weather patterns which lead to increased
flooding, forest fires and storm damage, the report notes. The most
direct risk to the U.S. will come from hurricanes, which are
expected to become more frequent and powerful, but rising sea levels
could also inundate many coastal cities and portions of coastal
states, while forest fires become more frequent.
Environmental changes could push the price of insurance too high for
customers in high-risk areas, and some insurers are already
abandoning markets in states that are vulnerable to hurricanes.
Allianz and WWF want to engage the insurance industry, governments
and regulators to manage the risks associated with climate change.
Fireman's Fund Insurance, a unit of Allianz, will introduce
commercial insurance policies this year to encourage development of
green buildings which reduce energy consumption and GHG emissions.
One product will provide a discount to LEED (Leadership in Energy &
Environmental Design) certified buildings.
“We need to better understand the effects of climate change and the
changing environment for our customers,” says Clem Booth of Allianz.
“But if we can find a way to provide insurance in the face of major
changes, from the first transatlantic voyages to global terrorism,
then we can find new ways to address climate change."
"Global warming is the greatest environmental threat facing the
world, and the people and animals that inhabit it; the cost of doing
nothing carries a price tag none of us can afford,” adds Carter
Roberts of WWF-US. “The insurance industry has a vested interest in
stepping up to the plate and being a part of the solution. Allianz
has been a leader on this issue and we hope that the entire industry
makes climate change a top priority.”
The report recommends that governments and insurance companies
communicate appropriate signals to homeowners and companies moving
into high risk areas, and says regulators must consider carefully
the impact of programs which keep insurance rates artificially low.
By masking the real price of risk, such policies encourage
over-development in high risk areas, it explains.
The report also suggests that U.S. insurers start to incorporate
future potential climate change impacts into their planning, such as
continued sea level rise and longer fire seasons, rather than
relying only on historical data of past weather events. Another way
to minimize losses related to climate change is to promote
energy-efficient building materials and improved building codes to
emphasize “the win-win opportunity for customers presented by energy
efficient buildings that also incorporate state-of-the-art
protection against wind damage, fire, and water influx.”
Companies should “commit to make internal operations climate neutral
through usage of alternative energy, funding of sequestration
projects, efficiency improvements and ‘green’ purchasing, and carbon
offset purchases,” it suggests.
Allianz Group is one of the world's largest insurers with 177,000
employees in 70 countries, 60 million customers and annual revenue
of Euro 100 billion with Euro 1.26 trillion in assets under
management.
Known in the United States as World Wildlife Fund, WWF works in 100
countries and has 4 million members worldwide. It is the world's
largest privately-financed conservation organization.
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