Insurance as a Societal Partner

The role of the industry should be viewed more as a partner in reducing or mitigating climate change risks, rather than merely an instrument that responds to pay for damages after they happen.

The industry's intellectual capital can be offered as a tool in the development of public policy and business solutions—a “mechanism to show where capital investments can always result in a benefit.”

Patton introduced Zurich's “Risk Interconnection Map,” which highlights multitude of risks that manifest due to climate change.

“This type of information could be made available to policymakers,” she says.

Mark Way, senior vice president and head of sustainability at Swiss Re, says the industry has developed products “for those wanting to minimize their climate change impact,” but these so-called green policies “miss the point where we have the biggest impact.”

The industry needs to promote a “greater understanding of risk management [and] how insurance fits into that—how insurance can be an effective component to increasing resilience,” Way says.

Government needs to think more—with the help of the insurance industry—about risk-reduction if insurance is to remain readily available.

Lacking Innovation

Bob Shine, chief underwriting officer for North America at XL Group, says he doesn't think the insurance industry is terribly innovative.

The public has to be willing to buy a product at a price that matches the risk in order for the insurer to make a return, he says.

“Investors like uncertainty less than insurers do,” says Shine, who adds that he feels the industry wants to respond but “tends to retreat and do what we know is safe.”

The Most Dangerous Country in the World

Likely the most frank talk about climate change came from Nicholas Coch, a professor of geology and forensic “hurricanologist” at CUNY Queens College.

“Anyone who denies [climate change] simply can't read a thermometer,” he says.

He calls the United States—with its simultaneous risk of hurricanes, earthquakes, volcanoes and tornadoes—the most dangerous country in the world.

“During a normal time, we're in trouble,” the professor adds. “In a time of global change, we are in deep trouble.”

Coch criticized the industry's “unrealistic reoccurrence frequency.”

“Frequency and consequences have to be considered together,” he says. “[Superstorm] Sandy is not the big one.”