Over the past several years, climate change has become one of the most hotly debated topics in the world. As the scientific community continues to search for answers about temperature fluctuations, weather patterns and other climate-related shifts, the insurance sector and businesses across the U.S. are looking for ways to prepare for the future.
A recent study from the non-profit sustainability leadership organization Ceres looked at the preparedness of insurance companies across the country, and found that many are not ready for the effects that could come about due to climate change.
Overall, the research found that few members of the insurance industry had a response plan in place to cope with this key global issue. Factors that were taken into consideration were risk management, governance and public engagement, among other elements.
"Despite being on the 'front line' of climate risks, most of the company responses show a profound lack of preparedness in addressing climate-related risks and opportunities," Ceres president Mindy Lubber said in a statement.
However, Lubber did commend many property and casualty insurance agencies for showing strong leadership in relation to climate change – a trend she urged must continue.
Businesses look to adapt to climate change
Climate change and global warming could have a widespread impact on how businesses operate. Many scientific studies have found data that suggests shifts in weather patterns and temperatures, rising sea levels and more severe storms, among other developments.
These trends could drastically affect companies around the world, as well as indemnification markets such as property and casualty and workers' compensation insurance. Before problems become apparent, many businesses are getting proactive about climate change.
"We think the time for debating [climate change] is over," Ed White, vice president of customer strategy and environmental for Massachusetts-based electricity and natural gas company National Grid, told The Boston Globe. "We see it occurring. We've lived through the flooding, we've seen the damage that it had to our communities and our equipment."
Climate change has the ability to increase power outages, interrupt business services or impede supply chains, among other issues. A sound risk management plan can address those issues before they become reality.
The Boston Globe explained that the concerns are affecting insurance agencies as well as businesses. Some providers are looking into more effective modeling and prediction technology to determine potential losses for future storms or other climate-related events. So far, the best strategy has been to gather data and shore up a risk management plan for a variety of possible scenarios.
