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Insurance Companies Must Disclose Climate Risk
Posted by Charles on 19 March 09, 12:23 PMBeginning in 2010, any insurer with more than $500m in premiums will have to disclose financial risks they face related to climate change and how these risks will affect their businesses. According to a Wall Street Journal article, the National Association of Insurance Commissioners (NAIC) decided to require the annual disclosures in response to two major climate related issues facing insurers: increasing risks of extreme weather events; and decreasing “profits of companies such as coal-fired utilities in which insurers commonly invest” because of a price placed on carbon emissions.
This is a significant development because it shows insurers view climate change as a possibly disruptive factor in their businesses and risk models, and also their assumption that some type of carbon cap or tax will soon be implemented.
In their announcement on the decision, the NAIC cited “the potential impact of climate change on insurer solvency and
insurance availability and affordability across all major categories of
insurance.”
Ceres press release available here.