COMMENT: How US insurers can make America green again

Published in: Risk management, Cat risk, Environment, Conduct risk, Corporate strategy, Reinsurance, Regulation, Investment risk - strategy, People, Climate change and sustainability, USA focus

Companies: Zurich, Axa

President Donald Trump is no stranger to outrage. But it’s time for US insurers and regulators to get fired up over his latest rejection of climate change.

During a visit to California last month to view the state's response to wildfires, President Trump ignored the scientific consensus that climate change is playing a major role in the infernos that have devastated the West Coast.

Instead, he insisted it will "get cooler" and "I don't think science knows". If this is leadership on the most pressing risk facing humanity, God help us.

And this is where the US insurance sector comes in. They are the ones picking up the tab for climate-related losses as the West Coast burns, hurricanes increasingly strike the Gulf coast and floods destroy property and livelihoods.

When President Trump and others spurn science and climate change, where is the scientific, risk management and moral backbone of US insurers and regulators to intervene and call this information out as “fake news”?

If climate comes up in the next presidential debate with Joe Biden, it’s not inconceivable the president might suggest building a big, beautiful firewall to stop wildfires – and then call for the fires to pay for it!

US insurers are clearly worried about climate risk from their discussions at last month’s InsuranceERM Americas 2020 virtual conference.

Zurich North America’s head of corporate sustainability, Ben Harper, said regulators need "to step in" and set out to the insurance industry what is required on climate risk. 

“There are two ways to really influence people. One is with a carrot and another is with a stick, and in some instances we are going to need someone with that stick,” said Harper.

Message

Regulators are beginning to get the message. After years of persistence from the likes of Washington’s Mike Kreidler, even those in staunchly red states such as South Carolina are recognising something needs to be done.

But leadership on climate change among US insurers is badly lacking. Sheldon Whitehouse, Senator for Rhode Island, recently told InsuranceERM there is a “sincere expression of disinterest” from the insurance industry to help bring climate legislation to the US.

If it’s because the issue is political and divisive, that is a cop-out, and quite frankly a pathetic excuse from any insurer to the world’s children when solutions can be actioned now to create new opportunities, jobs and a sustainable life for all.

Axa recently flagged fake news and misinformation as key issues because they can undermine the understanding of emerging threats.

The insurer said: “Climate change remains the number one risk in Europe, but falls to third place in Asia and America. The drop is particularly marked in North America, where the share of experts who consider this risk major has fallen from 71% in 2019 to 46% in 2020.”

Come on US insurers. You can play a huge role in highlighting and addressing climate risk – because it’s everyone’s business.

And if the issue is so political, as the former host of the TV show The Apprentice, it’s time to tell President Trump on election day, “You’re fired”.

Ronan McCaughey