Insurance Goes Green To Fight Climate ChangeWho'd have thought? According to a recent online news story that I read, the insurance industry is taking steps to help in the fight against climate change.
It makes sense: it will work in their favour in the long run, since it should also mean less claims for severe weather phenomena. And after the 2005 hurricane season, insurers are worried about increasing claims, with some good reason. Although 2006 hasn't shaped up as bad as predicted, this doesn't mean that the threat of severe weather and global warming has gone away. It's a short reprieve rather than a complete reversal.
Insurers are helping promote change through some interesting insurance products that give benefits for taking steps towards conservation of energy and green-house gas emissions. For instance, Firemen's Fund Insurance will have a new green coverage that includes rate credit and incentives for commercial customers who rebuild after damage occurs, using green and LEED building practices.
Even more interesting, Marsh and AIG, the world's biggest broker and insurer respectively, will now have insurance products that encourage reduction of carbon emissions. Companies who participate in carbon offset and carbon emissions trading can benefit. It could be that the private sector gets the whole "carbon credits" market going, despite the US government's lack of leadership.
Some insurers were already moving in the right direction even before Katrina hit. A number of insurance companies invested in hurricane loss prevention at almost 500 commercial locations in the Gulf before Katrina. These locations experienced about 8 times less damage than other properties, and this avoided an estimated $500 million in claims -- which benefitted both the insurance company and the commercial customers.
This is one place where we can all agree: what benefits the insurer will also benefit the insured. Now if I could just get a discount for buying all those energy efficient lightbulbs or increasing my home's insulation, that would be perfect.