Insurance and Climate Change column

Sadly The One Thing 2020 Did Well Was to Heat Things up

By | February 4, 2021

2020 wasn’t the bottom of the barrel in all regards – depending on how you look at it.

The planet’s average surface temperature in 2020 tied with 2016 as the warmest year on record.

An analysis by NASA’s Godard Institute for Space Studies shows the year’s globally averaged temperature was 1.84 degrees Fahrenheit (1.02 degrees Celsius) warmer than the baseline 1951-1980 mean, edging out 2016 by a “very small amount.”

“The last seven years have been the warmest seven years on record, typifying the ongoing and dramatic warming trend,” GISS Director Gavin Schmidt said in a statement. “Whether one year is a record or not is not really that important – the important things are long-term trends. With these trends, and as the human impact on the climate increases, we have to expect that records will continue to be broken.”

According to the analysis, loss of sea ice and ice sheet mass, sea level rise, longer and more intense heat waves, and shifts in plant and animal habitats, are the results of these rising temperatures.

The analysis represents surface temperatures averaged over the entire planet for the year. Local weather plays a role in regional temperature variations, so not every region experiences similar amounts of warming. According to NOAA, parts of the continental U.S. experienced record high temperatures in 2020, while others did not.


The U.S. Air Force has selected Jupiter, a California-based provider of predictive data and analytics for climate risk and resilience, to study the impact of sea level rise and flooding at Wake Island Airfield.

Jupiter has been selected along with BEM Systems to conduct a study to anticipate future sea-level rise and flooding at Wake Island Airfield in the Micronesia Region of the Pacific Ocean.

The project is designed to help the Air Force with strategic asset planning and to prepare for and mitigate anticipated consequences of severe weather events.

The study will look at “hardening” certain facilities at the airfield, or relocating facilities that are projected to be at risk from storm surge and flooding.

“The science of quantifying risk from climate change has matured, and at facilities like Wake Island we can accurately anticipate and mitigate risks from future storms in great detail,” Rich Sorkin, CEO of Jupiter said in a statement. “With the new Biden Administration, we expect that Jupiter’s work in the public sector will accelerate, and we look forward to a new era of government engagement.”

As part of the project, Jupiter plans to develop a coupled hydrodynamic model to predict flooding from tropical storm surge and wave runup at Wake Island Airfield.

“Much of the disruption we anticipate from climate change will occur within a 50-year time horizon, with some effects already being felt in the Pacific,” Sorkin said. “Just as the military is a driving force around the adoption of many of today’s technological advancements, we anticipate that the Air Force’s early adoption of climate analytics and resilience planning will be a model for other public- and private-sector institutions moving forward.”

Stock Valuations

Analysts at Societe Generale SA have published a report about European insurers and reinsurers showing that an insurer’s position on coal underwriting and investments can have an effect on its valuation ranging from -3% to +9%.

The bottom-line in the report, which includes their specific environmental and social governance input for stock valuations, is that insurers that do more to exit coal can gain points in their stock valuation while those who have done the least will lose, according to a Bloomberg article published this week in Insurance Journal.

Using this scoring metric, which is more heavily weighted toward environmental issues than opposed to social and governance factors, the bank’s analysts raised their target price for AXA SA shares by 6%, their target price for Swiss Re AG, Zurich Insurance Group AG, Assicurazioni Generali SpA, Allianz SE and Munich Re by 5%, and their target price for Scor SE by 4%.

In their 74-page report, the analysts write that halting coal underwriting is significant because without insurance these projects are no longer viable.

“Therefore, the insurance industry can, almost single-handedly, exert pressure on coal energy producers, which other industries are less well placed to do,” they wrote.

The number of insurers that not only have curtailed investing in coal, but have stopped or reduced underwriting these projects, has continued to grow. Lloyd’s was one of the more recent big insurers to make such a move, announcing late last year the Lloyd’s market is moving to end its insurance of coal and oil sands businesses while at the same time ceasing investments in such carbon-producing assets by Jan. 1, 2022.

However, U.S. insurers are a few steps behind their European counterparts, according to an environmental scorecard report released last December.

When in France

A Paris court is holding France legally responsible for its failure to meet targets intended to reduce greenhouse gas emissions.

The lawsuit was launched by four NGOs, including Greenpeace France and Oxfam France, following an online petition that gathered 2.3 million signatures, according to a report on Thursday covered by CNN.

Signers of the petition hoped to “compel the State to take all necessary measures to reduce greenhouse gas emissions” to meet the 1.5 degrees Celsius (2.7 degrees Fahrenheit) target set by the Paris Agreement, the online petition states.

The Paris Agreement, signed in 2016 by most of the world’s countries in an effort to limit global warming to below 2 degrees Celsius, was brokered by France, which committed to reducing greenhouse gases by 40% by 2030 and reaching carbon neutrality by 2050.

The NGOs accused the nation’s authorities of insufficient policy actions to tackle climate change, and said that greenhouse gas emissions under the current government “dropped at a pace that was twice as slow as the trajectories foreseen under the law,” CNN reported.

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