Ceres, a national coalition of investors and environmental groups, praised American International Group for becoming the first U.S.-based insurance company to adopt a policy to manage risks and capture business opportunities posed by climate change.
AIG unveiled its new policy on May 15. The Boston, Mass.-based Ceres has been seeking improved U.S. insurance industry practices on climate change through the Investor Network on Climate Risk, a group of 50 institutional investors that manage nearly $3 trillion in assets.
“This is an important step that signals to the market and policy makers that climate change is a critical insurance issue,” said Ceres president Mindy Lubber.
AIG's new policy states that the company is “actively seeking to incorporate environmental and climate change considerations across its businesses, focusing on the development of products and services to help AIG and its clients respond to the worldwide drive to cut greenhouse gas emissions.”
AIG's new policy comes at a time when U.S. insurers are seeing record increases in insured losses from extreme weather events. A 2005 Ceres study found a 15-fold increase in insured losses from catastrophic weather events in the past three decades.
Investors also have been asking that insurers improve their corporate governance and disclosure on climate risk. In December 2005, 20 leading U.S. investors, with combined assets of more than $800 billion, sent a letter to 30 of the largest publicly held insurance companies in North America, urging them to disclose their financial exposure from climate change and list steps they are taking to reduce those financial impacts.
Regulators and brokers also are increasingly concerned about climate risk. This year the National Association of Insurance Commissioners announced a new task force designed to examine the impacts of climate change and possible measures that insurers and regulators can take to reduce risk.
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