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Insurers could have been climate heroes. Instead, they have risked a crisis to dwarf 2008
(The Guardian, 27 Mar 2022) Complex agreements have done little to reduce emissions in the last 30 years, but a universal tariff could avert catastrophe.
In 1994, I wrote an article for Time magazine noting that property and casualty insurers would provide an early warning about the costs of climate change and also serve as a white knight. My white knight turned out to be very timid and the reasons why help explain why it has been so hard for the world to take action on global warming.
The reinsurance side of the industry, the side that underwrites insurance for catastrophic risks, understood early on that climate change could bankrupt the industry and reinsurers produced some of the best reports on the costs climate change will likely impose on society. At the same time, however, the retail side of the industry continued to provide coverage for home and businesses at risk from climate-related fires and wind storms. Indeed, since the climate risks surfaced, millions of people have moved into wildfire zonesin the US west and to coastal properties at risk of hurricanes, storm surges and sea level rise. That influx of people continues, even though the Florida coast has eight of the 20 cities in the US most threatened by sea level rise.
Insurers continued to ignore the threat of climate change in part because the incentives at the retail end are to continue to write policies right up until catastrophe strikes and because the reinsurance end has shown extraordinary ingenuity in limiting, spreading and offloading risks.
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The Guardian, 27 Mar 2022: Insurers could have been climate heroes. Instead, they have risked a crisis to dwarf 2008
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