Climate Change Presents Challenges for U.S. Insurers

A new report suggests that U.S. insurance companies would do well to pay greater attention to the potential effects of climate change on the insurance business.

"The report makes clear that extreme weather losses are escalating and pose enormous challenges for U.S. insurers that they should pay far more attention to," said Mindy Lubber, president of Ceres, the nonprofit advocacy group that released the report. "A small number of insurers have stepped to the plate in mobilizing a response to this global threat, but far broader engagement and action from the industry is needed."

Floods, heat waves, hailstorms, forest fires, and tornadoes made 2011 a nightmare year for U.S. insurance companies. Last year's extreme weather events contributed to net underwriting losses of $34 billion and the most credit downgrades in a single year since 2005, the year that Hurricane Katrina devastated New Orleans and much of the Gulf Coast.

This year has not been much better. The drought that has ravaged crops across the Midwest is expected to cost insurers an estimated $20 billion. The Federal Crop Insurance Corporation will bear the brunt of these costs, but more than $5 billion will be paid out by private insurers.

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Harry Stevens is a Media Consultant for 3BL Media / Justmeans. After earning his Bachelors of Arts in international relations from the University of Puget Sound, Harry moved to Guatemala to do business development for Mercado Global, a fair trade fashion organization. Harry has written on social enterprise, sustainable finance, and fair trade for a number of popular blogs, including Justmeans and The Fair Trade Times. A serial road-tripper, Harry has been to forty-seven of the forty-eight contiguous states, and is actively seeking an excuse to visit Oklahoma. You can follow Harry on Twitter: @Harry_Stevens