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Insuring Our Future Climate

Insurers are in the business of helping society to understand and manage risk, and is one of the largest sectors of our economy. The industry has a long history of advocating for common-sense precautions such as requiring seatbelts in cars, fire codes in office buildings, and safety standards for the workplace. These simple solutions help to keep American citizens— and American businesses—out of harm’s way.

Today, we face a new and formidable threat—climate change. Extreme storms, wildfires and floods have devastated communities across the nation, and climate change is expected to increase the frequency, intensity and duration of future events.  While climate change creates growing threats to the global economy, it also represents new opportunities for the insurance industry to demonstrate its leadership while also bolstering its bottom line. The business rationale for insurers to develop and promote climate risk resiliency is compelling, and there is a strong need for the industry to play a role.

The insurance industry can’t solve the climate crisis on its own, but insurers have multiple tools at their disposal to help reduce climate-related losses for businesses, consumers, governments, and insurers themselves. Ceres works directly with insurance companies to promote six proactive steps the industry can take today to address the climate threat.


Traditional risk modeling uses pastexperience to predict the impact of future weather events. But in the case of rapid and unprecedented climate change, historic weather patterns may not always be reliable predictors of future conditions.

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Insurance companies will need to re-assess their risk exposure based on new and emerging climate data, and share these findings with regulators and policyholders.

Working with regulators, insurers can use updated risk models to update their underwriting and pricing to reflect the current reality. Additionally, by educating communities, businesses and individuals on growing climate risks, insurers can help American communities to plan for the future.  This in turn will reduce the need for insurers to retreat from exposed regions, leaving government—and in turn, taxpayers—to bear the full cost of future damages.


Hilton Manhattan EastClimate change, and increases in extreme weather events threaten communities and basic infrastructure such as roads, bridges, airports, water treatment facilities and dams. Insurers can work alongside planners to strengthen the climate resiliency of communities. For example, insurers can influence the creation and enforcement of stronger building codes so that property is secured against high winds, flooding, power losses and extreme heat. Insurers can also lend their expertise to land use planning, ensuring that critically exposed markets are more resilient against the impacts of climate change and are rebuilt to withstand environmental catastrophes. Investing in greater resiliency today will help to ensure insurance availability and affordability in the future.


If insurers are to truly play a role in addressing the threat of climate change companies must also focus on the source: carbon pollution. Insurers have an opportunity to lead the way in advocating for federal and international policies that limit greenhouse gas emissions. By helping society to reduce harmful emissions, insurers can work to decrease the severity of future climate change impacts and help build a secure, clean energy economy.



Insurers can also enable our transition to a low-carbon economy by scaling up products and services that promote clean and efficient energy use as well as resilient building design. Innovative products, such as “Pay As You Drive” auto insurance (PAYD) and discounted premiums for energy-efficient buildings, provide powerful incentives to reduce energy use and, in turn, climate changing greenhouse gases.  Insurers should educate homeowners and businesses about weather-resilient building materials and techniques, while offering incentives for implementation. By developing new products and underwriting emerging clean energy developments such as wind farms and solar power arrays, insurers have an opportunity to not only speed up the transition to a low-carbon economy, but profit from it as well.


As major economic actors, insurers are also large-scale investors. They can choose to invest in clean energy innovation, or continue to bet on climate-warming fossil fuels. They can invest in corporations that are leading the way in water conservation, energy efficiency and environmental responsibility, or they can support those pursuing “business-as-usual” in an age of ever-scarcer resources.

However, insurers will need to consider the sustainability of their enterprises and investment portfolios alike. Resources such as The Ceres Roadmap for Sustainability and The Ceres Blueprint for Sustainable Investing can serve as guides for the insurance industry as well. Climate change is no longer an extraneous, non-material financial concern for insurers, or for the firms they invest in. It’s a significant risk that must be managed responsibly.


Insurers should measure and report progress on their actions to confront climate change. Continuing to increase the level of transparency and consistency of insurance company public reporting, such as through the Climate Risk Disclosure Survey and SEC filings, enables insurance regulators, investors, and policyholders to assess the materiality of climate risk to a particular insurance company and take appropriate actions in response.

Reports and Resources

Climate Risk Disclosure in SEC Filings: An Analysis of 10K Reporting by Oil and Gas, Insurance, Coal, Transportation and Electric Power Companies
Jun 10, 2009
June 2009 - This Ceres/Environmental Defense Fund report evaluates the current state of climate risk disclosure by 100 global companies in five sectors that have a strong stake in preparing for a low carbon future: electric utilities, coal, oil and gas, transportation and insurance. It assesses climate risk disclosure in the SEC filings made by these companies in Q1 2008, and finds very limited disclosure.
Resilient Coasts: A Blueprint for Action
Apr 08, 2009
April 2009 - The Heinz Center and Ceres undertook the challenging task of forging consensus on principles and actions to increase coastal resilience for three fundamental reasons: our coasts are threatened, there are reasonable steps to counter those threats, and we as a nation are not yet taking them.
From Risk to Opportunity 2008: Insurer Responses to Climate Change
Apr 08, 2009
April 2009 - Hundreds of new insurance initiatives, including coverage for green buildings, renewable energy, carbon risk management, and officers’ liability are being offered to tackle climate change and rising weather-related losses in the U.S. and globally, according to this report by the Ceres investor coalition.
From Risk to Opportunity 2007: Insurer Responses to Climate Change
Nov 06, 2007
November 2007 - Global warming and the growing incidence of extreme weather events pose an enormous challenge to the insurance industry. This report focuses on the significant progress made by insurers to develop these new products and services.
Global Framework for Climate Risk Disclosure
Oct 06, 2006
October 2006 - A unique global partnership of 14 leading institutional investors and other organizations representing trillions in assets today released the Global Framework for Climate Risk Disclosure to provide specific guidance to companies regarding the information they provide to investors on the financial risks posed by climate change.
Guide to Using the Global Framework for Climate Risk Disclosure
Oct 06, 2006
October 2006 - The Guide is a companion tool for using the Framework. For each of the four elements of the Framework, the Guide provides specific guidance for companies about how to disclose using the most common reporting mechanisms for climate risk: securities filings, the Global Reporting Initiative, and the Carbon Disclosure Project. The Guide also contains examples of disclosure from leading companies using these disclosure mechanisms.
From Risk to Opportunity 2006: How Insurers Can Proactively and Profitably Manage Climate Change
Aug 06, 2006
August 2006 - Dozens of new insurance activities, such as 'green' building credits and incentives for investing in renewable energy, are emerging to tackle the causes of climate change and rising weather-related losses in the U.S. and globally, according to a major new report issued today by the Ceres investor coalition.
Availability and Affordability of Insurance Under Climate Change: A Growing Challenge for the U.S.
Dec 06, 2005
December 2005 - This Ceres report focuses on the growing risks that U.S. insurers, government and consumers face from climate change. The report, which includes specific recommendations for addressing this growing insurance challenge, was published in advance of an upcoming meeting of the National Association of Insurance Commissioners at which time the NAIC will be examining the implications of climate change on the industry.