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Climate Change & Insurance: Threat or Opportunity?

Climate Change & Insurance: Threat or Opportunity?. Brett Schreiber Marketing Fisher College of Business. Global Warming Determination. Intergovernmental Panel on Climate Change (IPCC) is made up of thousands of scientists that come up with a defined statement on climate change

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Climate Change & Insurance: Threat or Opportunity?

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  1. Climate Change & Insurance: Threat or Opportunity? Brett Schreiber Marketing Fisher College of Business

  2. Global Warming Determination • Intergovernmental Panel on Climate Change (IPCC) is made up of thousands of scientists that come up with a defined statement on climate change • 5assesments have been made with the last assessment being in September of 2013 • http://www.youtube.com/watch?v=rFYbdHW7QAM

  3. Highlights from IPCC AR5 • 95% sure the climate change is manmade • Increase from 90% in 2007 and 66% in 2001 • “The pause”- .22 deg F increase per decade since 1950 while this has leveled off to .09 deg F since 1998 • Conflict: models are not reproducing warming of last 15 years • El Nino/La Nina

  4. Human Impact on Climate Change • Differences in land cover • Release or cleanse of pollutants • Release or cleanse of greenhouse gases

  5. What Insurance Companies Think of the Climate Change • There has been almost unanimous agreement that the climate is changing • Mainly worry about increasingly severe weather events and global warming • More severe natural disaster makes for more cost in damages. • Ex: 12.3 billion dollars going to corn farmers that suffered from last years drought

  6. Pricing Response • With increased severity of these weather events, potential losses are inevitable • Talks of risk adequate pricing and less availiability in high risk areas

  7. Risk Management Response • Loss prevention is thought of as a more reasonable approach • By limiting the amount of on-site fuel accumulation, changing roofing materials, clearing brush around the buildings and even by not using a lot of oil-based plants in the landscaping, “we can manage the liability so we can still put our capacity out there even in high-risk zones.”  -Zurich Insurance

  8. Opportunity • A more climate threatened world gives insurance companies the ability to increase revenue through covering other emerging business that is trying to solve the problem • Most seen in alternative energy • Some governments encourage alternative energy with incentives • Ex: Germany and solar power • Risk of renewable energy is that they may not be operational in some nature conditions.

  9. Review • IPCC determined 95% of climate change is human caused • The increase in temp. has leveled off but thought to be due to El Nino/La Nina • Major Human impact on climate includes altering land cover, pollutants, and GHGs • Climate change does provide difficulties for insurance companies, but also gives opportunities through renewable resources and risk management

  10. Sources • http://www.propertycasualty360.com/2013/02/05/climate-change-insurance-existential-threator-ex?t=climate-change&page= • http://ecoopportunity.net/2013/03/climate-change-and-insurance-a-looming-threat-to-the-economy • http://www.ipcc.ch

  11. Questions?

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