Insurers Brace for Stormy Weather as the World Warms

"Everyone talks about the weather, but no one does anything about it," said Mark Twain.

Now that we understand the link between Earth's changing climate and the severe weather, that's no longer true. Individuals, companies, and countries are working to curb emissions that are warming the world and amplifying weather extremes.

On Capitol Hill yesterday, major re-insurers -- companies that insure insurance companies, thereby making make it possible for families and communities to recover from natural disasters -- drew a grim picture of increasing floods, droughts, severe storms and other weather disasters. Invited by a group of senators advocating responsible action, the insurance leaders called for our country that has long led the world in producing greenhouse gases to take the lead in tackling climate change. The insurers joined Sens. Bernie Sanders (I-Vt.) and Sheldon Whitehouse (D-R.I.) at a press conference to discuss the mounting financial impact of global warming.

"Perhaps no industry better understands the impact of global warming than the insurance industry whose job it is to analyze risk," Sanders said. "I am pleased leaders in that industry are speaking out about the need to reverse global warming."

Added Whitehouse, "Extreme weather events, like Rhode Island's historic floods in 2010, can result in the loss of homes, livelihoods, and even lives. These extreme events fit a pattern predicted by climate scientists, and we should take action now to minimize the damage that carbon pollution is causing to our country and our world."

Four out of five Americans live in places that have been federally declared as weather-related disaster areas at some point since 2006. Last year was especially devastating, with a record 99 disaster declarations. Hurricane Irene, a freak hurricane that hit the Northeast as far north as Vermont, killed more than 40 people and caused $7 billion in damage. All told, U.S. property and casualty insurers racked up $44 billion in losses from heat waves, drought, wildfires and other weather-related disasters in 2011.

And the extreme weather continues. The historic Texas drought that caused $9 billion in crop and other damage last year has rice growers on edge right now, as the Lower Colorado River Authority considers not releasing irrigation water -- for the first time in its history -- because of severe drought. January was the 323rd consecutive month with global temperatures above the 20th century average, according to the National Oceanic and Atmospheric Administration.

Our Ceres insurance program director, Cynthia McHale, who was asked to speak at yesterday's press conference, pointed out that taxpayers are bearing a rising share of the burden from severe weather losses, as private insurance companies find that some risks no longer make business sense to cover. The National Flood Insurance Program is already the second-largest fiscal liability of the U.S. government, with $1.2 trillion of commercial and residential assets on its books. And U.S. "residual markets" -- risk pools backed by state guarantees -- grew from $55 billion to $758 billion from 1990 to 2010. Government exposure -- taxpayer exposure -- is staggering.

We need to stop digging this hole. We need responsible action to slow, stop and reverse the accumulation of carbon pollution threatening dangerous changes to our climate.

The insurance industry gets it.

"A warming climate will only add to this trend of increasing losses, which is why action is needed now," said Mark Way, head of Swiss Re's sustainability and climate change activities in the Americas, who spoke at yesterday's press conference.

So do insurance commissioners in three states -- New York, California and Washington -- who are now requiring major insurers to disclose plans for responding to business risks from climate change. The companies, investors and public interest groups Ceres works with get it. The senators who called yesterday's press conference get it.

It's time for us to stop talking about climate change, and start doing something about it.

Mindy Lubber is president of Ceres, a leading coalition of investors and public interest organizations working with companies to address sustainability challenges such as climate change. Ceres leads the Investor Network on Climate Risk, whose 100+ members control more than $10 trillion in assets.