Insurance Handbook - Alaska Department of Community and ...

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Updates at www.iii.org/issues_updates Insurance Topics Climate Change: Insurance Issues Climate Change: Insurance Issues There is now a consensus among the scientific community that the climate is changing, with potential risk to the global economy, ecology, and human health and well being. But how much of this is due to natural phenomena and how much to the effects of human activity is a matter of debate. Also unknown is the extent to which weather patterns have already been affected. As assumers of risk, insurers seek to mitigate potential losses every day through a process known as risk management. Since climate change could lead to losses on a scale never before experienced, insurers are not waiting for researchers to produce all the answers. A 2009 report by Ceres, a network of companies concerned about global warming, identified some 244 insurancerelated organizations in 29 countries that were working in 2008 to find solutions to the threat posed by greenhouse gas emissions, up from 190 groups in 26 countries in 2007. Insurers are also redoubling their efforts in the more traditional areas of risk management, including alerting policyholders to the potential for lawsuits for failure to protect against or disclose possible harm to the environment. Meanwhile, society’s concern about climate change offers insurers new avenues for leadership and new opportunities for innovative products. Global Warming: When fossil fuels—coal, oil and natural gas—are burned to produce energy, so-called greenhouse gases, largely carbon dioxide, are emitted into the atmosphere where they trap heat. Forests and oceans can absorb some of the carbon. But to avoid the most catastrophic effects of what is predicted to occur, researchers say, carbon emissions must be greatly reduced, hence the push to reduce overall energy use, boost the use of energy from renewable sources such as solar heat and curb the use of paper and other products made from trees, which absorb carbon dioxide in the process of photosynthesis. Global warming has the potential to affect most segments of the insurance business, including life insurance if rising temperatures lead to an up-tick in death rates. Property losses of all kinds are most likely to increase, and there is the potential for much higher commercial liability losses if shareholders and consumers try to hold businesses responsible for changes to the environment. Insurers’ Contribution to Lowering Greenhouse Gases: Insurers, like companies in other industries, are promoting strategies to lower greenhouse gas emissions. Some insurers have been warning public policy leaders and the general public about the threat of climate change for years, and others were among the I.I.I. Insurance Handbook www.iii.org/insurancehandbook 35
Insurance Topics Updates at www.iii.org/issues_updates Climate Change: Insurance Issues first to adopt public statements on the environment and climate change and to join business coalitions calling on the federal government to enact legislation to reduce greenhouse gases. Some, particularly reinsurers, are sponsoring research and working with others interested in the same kind of solutions, such as finding ways for individuals and society to adapt to extreme weather, particularly in developing countries. Many insurance companies are committed to reducing their own total greenhouse gas emissions and offsetting the remainder through contributions to reforestation and renewable energy projects. They also encourage their employees to adopt “green” policies in their private lives. Some were involved in projects to reduce greenhouse gases even before such efforts gained widespread public attention, and many are now reinforcing their policyholders’ desire to reduce their carbon footprints by offering them paperless billing and documentation. Some have upgraded the quality of their Web sites to encourage policyholders to transact business electronically. At least one auto insurer sells policies exclusively online. Insurers are also working on another front: seeking to reduce the incidence and cost of property damage caused by those events that still occur, despite society’s best efforts to reduce greenhouse gases. New Products and Business Opportunities: Without insurance the economy could not function. Insurers essentially enable new products and services to be created by assuming the risk of loss. Just as they quickly adapted existing liability insurance policies for horse-drawn carriages, or teams of horses, to automobiles towards the end of the nineteenth century, so they are responding to climate change initiatives at the beginning of the twenty-first century. Opportunities exist on several fronts. First, there are new risks to insure, including new industries such as wind farms and other alternative fuel facilities, and emerging financial risks such as those involved in carbon trading. Insurance policies related to carbon trading protect those that invest in clean technology projects against failure of the project to deliver the agreed-upon emission rights. A number of companies are also offering their clients carbon project risk management consulting services. A carbon credit permits the holder to emit one ton of carbon. The Kyoto Protocol and other cap and trade systems now under discussion set ceilings for carbon output and allow those that produce less than the limit to sell credits to those that exceed it. Investors in clean technology projects such as reforestation and renewable energy buy the rights to credits and sell them in the international carbon trading market. Among the risks associated 36 I.I.I. Insurance Handbook www.iii.org/insurancehandbook
Page 1 and 2: Insurance Handbook A guide to insur
Page 3 and 4: Insurance Information Institute 110
Page 5 and 6: To The Reader For over 50 years, th
Page 7 and 8: Regulatory/Legislative Organization
Page 9 and 10: Insurance Basics Overview Accountin
Page 11 and 12: Insurance Basics Auto Insurance 4.
Page 13 and 14: Insurance Basics Homeowners Insuran
Page 15 and 16: Insurance Basics Homeowners Insuran
Page 17 and 18: Insurance Basics Business Insurance
Page 23 and 24: Insurance Basics Life Insurance Lif
Page 25 and 26: Insurance Basics Life Insurance •
Page 27 and 28: Insurance Basics Annuities 4. Taxfr
Page 29 and 30: Insurance Basics Long-Term Care Ins
Page 31 and 32: Insurance Basics Disability Insuran
Page 33 and 34: Insurance Basics Disablity Insuranc
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Page 85 and 86: Glossary 401(K) PLAN An employer-sp
Page 87 and 88: Glossary ADJUSTER An individual emp
Page 89 and 90: Glossary ANNUITY DEATH BENEFITS The
Page 91 and 92: Glossary BALANCE SHEET Provides a s
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Glossary larger cushion of capital
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Glossary receive full payment on a
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Glossary *CONVERTIBLE TERM INSURANC
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Glossary savings and loan associati
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Glossary EMPLOYMENT PRACTICES LIABI
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Glossary insured’s spouse and chi
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Glossary contract with no penalty.
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Glossary GUARANTY FUND The mechanis
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Glossary premium life insurance pol
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Glossary INTERNET INSURER An insure
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Glossary LIMITS Maximum amount of i
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Glossary the states for people whos
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N Glossary NAMED PERIL Peril specif
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Glossary ORIGINAL EQUIPMENT MANUFAC
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Glossary and beyond reserves, prote
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Glossary be monthly, quarterly, sem
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Glossary price. Repurchase agreemen
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Glossary part of the responsibility
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Glossary cover the amount of the lo
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Glossary a preexisting condition. (
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Glossary VANDALISM The malicious an
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Glossary Property/Casualty Insuranc
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Directories ISO 545 Washington Blvd
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Directories PCI - WASHINGTON, DC 44
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Directories Financial Services Indu
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Directories COMMODITY FUTURES TRADI
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Directories GLOBAL ASSOCIATION OF R
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Directories NATIONAL ASSOCIATION OF
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Directories THE COUNCIL OF INSURANC
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Directories GRIFFITH INSURANCE EDUC
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Directories Adjusters NATIONAL ASSO
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Directories INSURANCE COMMITTEE FOR
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Directories INSURANCE SERVICES NETW
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Directories Legal Issues and Servic
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Directories INSURANCE REGULATORY EX
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Directories INSURANCE INSTITUTE FOR
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Directories Title Insurance AMERICA
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Directories INSURANCE ADVISORY BOAR
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Alphabetical Index State specific a
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Alphabetical Index Intermediaries a
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State Organizations State Organizat
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State Organizations Pacific Associa
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State Organizations Florida State A
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State Organizations Illinois State
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State Organizations Kentucky Insura
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State Organizations Association Hea
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State Organizations Montana State A
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State Organizations Monmouth Juncti
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State Organizations Agent Associati
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State Organizations Other Organizat
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State Organizations Texas Coalition
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State Organizations Agent Associati
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Alphabetical Index YEAR EVENT 1601
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Brief Alphabetical History Index YE
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I.I.l. Resources COMMERCIAL INSURAN
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I.I.I. Member Companies Lockton Com
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The I.I.I. Insurance Handbook • C
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