10 Updates

Rift Widening Between Energy and Insurance Industries Over Climate Change

May 18 2014, 8:21am CDT | by

Being a big business, the insurance industry is a strong backer of free enterprise and its laissez-faire leaders. But a rift could be developing now that some major carriers are staking claims in...

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10 weeks ago

Rift Widening Between Energy and Insurance Industries Over Climate Change

May 18 2014, 8:21am CDT | by

Being a big business, the insurance industry is a strong backer of free enterprise and its laissez-faire leaders. But a rift could be developing now that some major carriers are staking claims in the climate change cause while many of their congressional backers have remained skeptical of the science.

For insurers, it’s not about the political machinations but rather, it’s about the potential economic losses. If even part of the predictions hold — the ones released by the Intergovernmental Panel On Climate Change that ascribe temperature change to humans with 95 percent certainty — then the rate of extreme weather events will only increase and the effects would be more severe. That, in turn, would lead to greater damages and more payouts.

“The heavy losses caused by weather-related natural catastrophes in the USA showed that greater loss-prevention efforts are needed,” says Munich Re board member Torsen Jeworrek.

He says that the United States suffered $400 billion in weather-related damages in 2011 and insured losses of $119 billion, which were record amounts. In 2012 — and despite Superstorm Sandy — losses were well above the 10-year averages at $165 billion total, of which insurers paid $50 billion. In 2013, insurance companies paid out, globally, $45 billion in claims, says Zurich-based Swiss Reinsurance Co ., adding that the United States accounted for $19 billion of that.

Meantime, Standard & Poor’s Ratings Services just issued a report saying that the credit ratings of sovereign countries would be affected by global warming. It pointed to Typhoon Haiyan in the Philippines, heavy flooding in Great Britain and the record cold temperatures this past winter in the United States, all of which caused economic damages and disrupted business practices.

But it adds that the developing nations in Africa and Asia are most at risk, namely because they are low-lying regions that are heavily reliant on farming and agriculture. At the same time, they are not in a financial position to handle catastrophic events.

Climate change is likely to be one of the global mega-trends impacting sovereign creditworthiness, in most cases negatively,” says S&P, in its report. It’s a view generally supported by Lloyd’s of London , which just said that climate-associated risks must be considered when underwriting policies.

To be sure, not all climate scientists are convinced that aberrant weather patterns are linked to global warming, even though they argue that rising temperatures are associated with burning fossil fuels. One such expert is Richard Muller, from University of California at Berkeley, who says that hurricanes and tornados have actually decreased with time.

“Global warming is real and it is caused by humans,” he says. But, “Climate change is not contributing to more intense tornados and hurricanes.”

Meantime, the Organization for Economic Cooperation and Development argues that governments must take the lead role to combat climate change. It notes that unlike the 2008 financial crisis, world leaders have not conceived a “climate bailout option.”

With all the clout that the insurance industry has on Capitol Hill, why is it not crusading for action on climate change? In fact, only 23 of the 184 insurance companies that the investor network Ceres surveyed say that they have a comprehensive strategy to deal with climate change. That’s ironic, given that coastal cities around the world are expected to incur $50 billion in annual losses through 2050, adds the OECD — a tab that would fall, in part, on insurers.

Not all carriers are “passive.” This past week, Farmers Insurance Co., a unit of the Zurich Insurance Co., filed suit against the city of Chicago for its alleged failure to prevent flood-related damages that it says are associated with climate change. It maintains that city officials are aware of the potential fallout from climate-related weather and yet they have done nothing to mitigate such events. As a result, it paid out millions in claims a year ago tied to storms in the city.

Other insurers, meanwhile, have broken ties to the Heartland Institute that denies man-made climate change, arguing instead that temperature fluctuations are a cyclical phenomenon. That’s one reason why Allied World Assurance Co., State Farm, Renaissance Re and XL Group are no longer financial supporters of the group.

“Numerous studies assume a rise in summer drought periods in North America in the future and an increasing probability of severe cyclones relatively far north along the US East Coast in the long term. The rise in sea level caused by climate chang e will further increase the risk of storm surge, adds Peter Höppe, head of Munich Re’s Geo Risks Research.

When it comes to a fix, the public sector will lead — but only when pushed by its citizenry or powerful financial concerns. Here, a potential battle is brewing between certain energy entities and the insurance industry that would pay many climate-related claims. Just who wins will depend on how severe the weather becomes and the financial toll it leaves behind.

 
Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was brok ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan R ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Seri Hi ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southern states last month. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 million in co ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation of ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaa ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

7 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Skyway (Kidex) today. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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