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Insurance Industry Making Adjustments for Climate Change

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Insurance Coverage ©freedigitalphotos.netAs the final tallies are finally counted following the destruction caused by Hurricane Sandy, surpassing the $50 billion mark, insurance companies are starting to pay attention.

Insurance is risk assessment, and while part of the story could be how insurance companies are looking to reduce their risk, the opposite is quite true, leading to increase their offerings in an increasingly risky climate, according to a recent study.

“Weather- and climate-related insurance losses today average $50 billion a year. These losses have more than doubled each decade since the 1980s, adjusted for inflation,” says the study’s author Evan Mills, a scientist in Lawrence Berkeley National Laboratory’s [BNL] Environmental Energy Technologies Division.

Overall, insurance is a $4.6 trillion business, and has considerable weight to throw in regards to policy making, even when it comes to climate change. Following climate talks and policies, including the UN Environment Program Finance Initiative, ClimateWise, and the Kyoto Statement, over 100 insurance companies globally are working to raise awareness, reduce emissions, assessing climate risks, and more.

The goal is to reduce risk, both for themselves and their clientele, ranging from private parties to global corporations. Their strategy doesn’t stop there, though, as insurance firms are seeing where they can offer new insurance products to those especially at risk of climate change related losses, such as hurricane-risky coastal zones, and precipitation-dependent crop growers.

Insurance companies haven’t just been urging others to consider their climate change risks, but they themselves are leading the way, reducing greenhouse gas emissions. Twenty six companies have claimed to reach a carbon-neutral status.

As one of the largest world businesses, insurance firms are in a prime position to influence government and corporate policy for a less risky future.

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