The State of Minnesota is asking insurance companies whether they are prepared to meet the risks associated with climate change, both in terms of how they calculate potential liabilities and in their own operations. The Star Tribune (“State asks insurers, are you ready for climate change?“, Bill McAuliffe, 8/10/2013) reports:
State Insurance Commissioner Mike Rothmann said Minnesota joined California, Connecticut, New York and Washington in the survey in order to help develop a broader base of information about possible disaster coverage. While the other states face risks of coastal storms that Minnesota does not, Rothmann said Minnesota firms are vulnerable to tornadoes, severe storms and river floods, which some climate models suggest are increasing with a warming climate.
“My perception is that we’ve seen some frequency changes with those events,” Rothmann said. “We want to make sure companies and policyholders have the best protection possible.”
Minnesota’s first billion-dollar disaster year was 1998, the year of devastating tornadoes in St. Peter and Comfrey. The $1.5 billion in losses were greater than those for the previous 40 years combined, said Mark Kulda, spokesman for the Insurance Federation of Minnesota. In three of the past five years, Minnesota’s insurance payouts for weather disasters were among the top three in the nation, he said. Since 1998, the average annual premium for Minnesota homeowners’ insurance has jumped from $368 to $960.
The survey was developed by the National Association of Insurance Commissioners with assistance from Ceres, a Boston-based organization. It asks insurance companies how they are changing their risk management and catastrophic risk modeling in light of the association between climate change and extreme weather events. It also asks insurers what they are doing to help policymakers and policyholders (their customers) prepare for and prevent the impacts of climate change, because, according to Ceres:
Insurers have a history of working with society to identify and manage new risks. Over the past century insurers played a key role in establishing the first public fire departments, founding Underwriters Laboratory to deal with a scourge of dangerous consumer products, mandating stronger earthquake standards in building construction, and hastening the arrival of new automobile safety equipment.