HOT TOPICS ▶ Climate Change     Undoing The New Deal     The Real Baltimore     Reality Asserts Itself     United Kingdom    

  February 15, 2018

Climate Change Costs Insurance Companies Billions, And Price is Rising

Insurance claims due to climate change-related disasters reached a record $135 billion in 2017. That should be a big wake-up call to the insurance industry, says Carbon Tracker CEO Anthony Hobley
Members don't see ads. If you are a member, and you're seeing this appeal, click here


Share to Facebook Share to Twitter

Real News simply has no entertainment value. But its news value puts CNN,MSNBC,ABC& BBC to shame! - Santhip
Log in and tell us why you support TRNN


Anthony Hobley is the CEO of London-based think tank Carbon Tracker. Carbon Tracker carries out in-depth analysis on the impact of the energy transition on capital markets. Anthony has been CEO since 2014, before this he was a Partner and Global Head of the Sustainability & Climate Finance Practice at global law firm Norton Rose Fulbright.


D. LASCARIS: This is Dimitri Lascaris for The Real News, reporting from Montreal, Canada. According to a recent analysis by Munich Reinsurance Company, in 2017, climate and weather disasters broke insurance records with insurance claims due to natural disasters reaching a record $135 billion. The world's largest insurance firm said that the United States, which faced three major hurricanes last year and multiple major wildfires, made up nearly 50% of global insured losses compared to its average rate of 30%. The 2017 hurricane season caused $215 billion in damages worldwide, making it the costliest hurricane season on record.

How is the insurance industry dealing with effects and risks of climate change? Could it become harder for companies and individuals to have insurance in the face of increased risk due to human-caused global warming? With us to discuss this, I'm very pleased to be joined again by Anthony Hobley, CEO of think tank Carbon Tracker. Carbon Tracker carries out in-depth analysis on the impact of energy transition on capital markets. Thanks for joining us again, Anthony.

ANTHONY HOBLEY: You're welcome.

D. LASCARIS: What I'd like to talk to you first about, Anthony, was 2017, the climate-related losses. Did these losses, broadly speaking, in your view, shake up the insurance industry? And if so, what are the major impacts that these losses have had on insurance industry practice and policy?

ANTHONY HOBLEY: Well, I think it has. I think it's been a wake-up call. I mean, the insurance industry has gotten incredibly good and very sophisticated at understanding and quantifying risk and setting premiums accordingly. So they're much more resilient than they were several decades ago in the face of major natural disasters and things like the [inaudible 00:01:51] claims and asbestos claims that nearly brought the Lloyd's market down, for example, several decades ago.

But even with that, I think it makes them more aware of the changing climate and the increased frequency and what's likely to come, so they're a lot more, I think, focused on it. That means they're going to be better at charging for it and passing that cost on to the companies, particularly if they begin to see a realistic chance that there may be liability associated with that and the companies who sell very carbon-intensive products.

D. LASCARIS: In particular, in the United States, is the availability and cost of insurance ... has it changed dramatically over the past three years? Around three years ago, Mark Carney gave a major speech relating to the effects of climate risk on the insurance market and warned that insurers were heavily exposed to those risks. And so in the U.S. in particular, have you seen much change in the injury since that time?

ANTHONY HOBLEY: Well, I think he was right to flag this up. I think generally insurance is still available, but there are some signs that insurance may not be available to all types of assets, and particularly maybe more of the government-backed export guarantee type insurance for particular types of projects like coal. We've seen a recent announcement from the Lloyd's market about that, so I think these are all very significant signs of things to come.

Of course, there's two types of risk here. There's the exposure to business disruption and the loss of markets because of, for example, with oil, gas, and coal demand destruction by competing technologies don't require oil, gas, or coal, and of course damage to the facilities themselves as we experience more extreme weather events as we saw in the major flooding and storms in Texas and in that regard. I mean, I think all of this is going into the insurance models and is likely to result in increased costs and possibly even, as we're beginning to see, withdrawal of cover altogether. Exactly what happened in many cases, in certain areas of flood, that is what happened several decades ago with regards to contamination cover unless that was specifically purchased.

D. LASCARIS: Do you think that the lexicon of the insurance industry is going to have to change? For example, by redefining the notion of an act of God?

ANTHONY HOBLEY: Well, they were looking at it. Insurers are incredibly good at understand risks and then adjusting coverage in policies in response to the ... Two or three decades, four decades ago, you could buy sort of blanket insurance that included contamination, and you could call on that policy years later if the contamination was caused during the period of that policy.

First, of course, the policies then got changed so it was events occurring and then they limited contamination and similar types of loss altogether so you had to buy bolt-on policies that had various particular specific conditions and due diligence associated with them. I think a lot of insurers are beginning to look at that now and how they define coverage, and particularly if you have a facility that is in an area that's particularly exposed to flooding or tropical storms, hurricanes, et cetera.

They are keeping a very close eye on the evolution of legal liability because it doesn't matter where you are if you've been selling products that are a major culprit, a major oil and gas company, coal company, or other company selling carbon-intensive products. The liability, should those legal principles ever be developed that far, could be pretty significant.

D. LASCARIS: Well, we've been speaking to Anthony Hobley, the CEO of Carbon Tracker, about the impact of last year's great climate-related losses on the insurance industry. Thank you very much for joining us today, Anthony.

ANTHONY HOBLEY: You're welcome. Thank you.

D. LASCARIS: This is Dimitri Lascaris reporting for The Real News Network.


Our automatic spam filter blocks comments with multiple links and multiple users using the same IP address. Please make thoughtful comments with minimal links using only one user name. If you think your comment has been mistakenly removed please email us at

latest stories

Trump and the Rise of the European Right, with Reps of UK Labour Party, De Linke, Podemos, and Syriza
Petroleum Executives Visit Trump, Increasing Offshore Oil Drilling
EPA Sued for Removing Independent Scientists from its Advisory Board
Laura Flanders Show: Women's History Makes The Future
Corbyn Allies in Labour Attacked For Supporting Palestinian Struggle
Paul Jay: Threats facing Humanity, Russiagate & the Role of Independent Media
Kochs and ALEC Behind Criminalization of Dissent Bills in Five States
West's Anti-Russian Fervor Will Help Putin Win Election On Sunday
Stephen Hawking: Fighter for Progressive Politics
Corbyn Smeared as 'Russian Stooge' for Requesting Evidence on Poisoned Spy
Chief in Charge of Internal Affairs To Retire from Baltimore Police
Corbyn Calls for Evidence in Escalating Poison Row
Sanders Resolution Against War in Yemen Challenged by Mattis
Senate Expands 'Lobbyist Bill' to Deregulate Real Estate
Expressions of Afro-Asian Solidarity during the Cold War
Economic Benefits of Tax Cuts Should Have Arrived - Where Are They?
Trump's Tariff Travesty Will Not Re-Industrialize the US
Is Another World Possible? - Leo Panitch on RAI (4/4)
Students Demand Leaders Address the Root Causes of Gun Violence
Far-Right Ministers in Chile's New Government Placed in Sensitive Positions
Israeli Military Strangles Its Own Weapons Manufacturer to Privatize It
Not Without Black Women
Newly Tapped Sec of State Mike Pompeo Comes with Deep Ties to the Koch Brothers
The CIA's New Torturer-in-Chief
Anti-Pipeline Indigenous 'Mass Mobilization' Has Begun
UN Rapporteur: US Sanctions Cause Death in Venezuela
Colombia's Conservatives Make Gains in Congress Vote Amid Fraud Allegations
Wilkerson: Trump Won't Make Peace with North Korea
The Rise of Jeremy Corbyn and Class Struggle in the UK Labour Party - RAI with Leo Panitch (3/4)
Western Governments Whitewash Saudi Dictator MBS as 'Reformer',, The Real News Network, Real News Network, The Real News, Real News, Real News For Real People, IWT are trademarks and service marks of Independent World Television inc. "The Real News" is the flagship show of IWT and The Real News Network.

All original content on this site is copyright of The Real News Network. Click here for more

Problems with this site? Please let us know

Web Design, Web Development and Managed Hosting