Do You Know How I Know That ....

... climate change is serious?

A: because the insurance industry is taking it seriously, and actuaries aren't known for wasting their time advancing warm and fuzzy causes.

I'm bringing this up because I just read an article in Business Insurance about insurance gurus meeting in Bermuda (of course) to discuss the challenges and opportunities of climate change:

An executive panel moderated by AXIS Capital Holdings Ltd. Chairman Michael A. Butt discussed whether climate change represents a threat or an opportunity for the global insurance industry.
By itself, “climate change is a threat to our business; it's not something we can safely muddle through,” said Barney Schauble, a managing partner at Hamilton, Bermuda-based Nephila Capital Ltd., an investment management company that specializes in insurance and reinsurance. “If pricing of existing products can reflect the underlying risk, then climate change is an opportunity—if not, then it's a threat,” he said.

I like the positive attitude.  Rarely do people talk about the potential upside of climate change.  Not that I'm positive about it, but if it is inevitable (not just from human activity, but also as part of a long term climate cycle) then we should get to work on figuring out how to manage it.   Unfortunately, quantitative data to put into models is still "utterly difficult" to obtain. 

Also, I liked this quote from Rolf Tolle, formerly of Lloyds of London:

“Where we have failed is in working with society and politicians and making it clear what the consequences are,” he said. “We're still not all marching in the same direction. With one voice as an industry, we could be much more effective” in leading the discussion on climate change.

The above quote is indicative of a point most people only associate with heath insurance, as that is: property and casualty carriers exert an enormous influence over industry and society, both as institutional investors and as de facto regulators of behavior, product standards, technologies, etc.   Moreover, carriers will often push for safety laws which will help manage risk downstream.  GEICO even went as far as to help buy speed detectors for police departments back in the 80's and 90's (I'd cite this, but I'm going from my junior high memories of reading columns of an enraged Brock Yates in Car & Driver magazine).  Anyway, while insurance is often maligned, the industry can be a force for positive change.  In this case (as the article mentions), carriers can do more to push policy holders and regulators to adopt technologies which facilitate lower carbon emissions. 

I'm going to stop myself before I expand on my theory that modern society could not exist without property & casualty insurance products...

But, it is good to read about non-politicized, non-hysterical, pragmatic business discussions of climate change.