Insurance industry begins to take climate change more seriouslyApril 27, 2012
Climate change controversy not an issue for insurers when compared with risks
Climate change is often considered to be a controversial issue, even in environmentalist circles. This controversy has spawn political, economic, and scientific debates that call into question the validity of the issue. While many are divided on the topic of climate change, the insurance industry is approaching the matter concerned only about the risks the phenomena presents and not about arguments regarding fact and fiction. The industry has a long history of taking risks very seriously and going to great lengths to examine and prepare for their impacts. This tenacity and caution is becoming more apparent in California.
CalCEF highlights lack of insurance as detractor for alternative energy projects
The California Clean Energy Foundation (CalCEF), a non-profit organization working to promote alternative energy, has spent years struggling to attract investors to alternative energy projects in the state. The organization has experienced varying degrees of success, but has noticed that alternative energy investment is stymied by fear of risk. Many alternative energy technologies are new or untested, presenting a significant risk for investors because of the potential failure of these systems. CalCEF believes that these risks are stopping a large amount of investments from coming to the alternative energy industry. The organization believes that the answer may lie in insurance.
Green insurance could make energy projects more attractive to investors
CalCEF suggests that insurance coverage could help attract investors to alternative energy projects. These investments could help drop the costs of these projects by an average of 20%, enough to expedite the development and construction of new energy systems throughout the country. The insurance industry has already shown a great deal of interest in providing coverage that is associated with alternative energy and environmentalism in general. This coverage is typically referred to as “green insurance.”
Chubb and other insurers offer green insurance, showing acknowledgment of changing environment
The Chubb Corporation, one of the country’s largest insurance companies, has begun providing employers with new insurance products that are designed to encourage employees to be more environmentally friendly. These policies are part of the company’s auto insurance products and provide coverage for those that carpool. Other insurance companies have begun offering policies that offer protection against storms, floods and droughts that occur in parts of the country where such phenomena are not common. Many of these policies are still new, but show that the insurance industry, as a whole, is beginning to take the issue of climate change more seriously.