Insurance and Climate Change column

Climate Change Activists ‘Welcome’ AIG CEO Zaffino; EU Urges More Insurance

By | March 4, 2021

Climate change is weakening the ocean currents that shape weather on both sides of the Atlantic.

The Atlantic Meridional Overturning Circulation during the 20th century has weakened more than at any other time over the last 1,000 years, new research shows.

The research, which was detailed recently by Inside Climate News, suggests that the circulation will lose even more strength in coming decades, possibly causing heat and cold extremes in Europe and rapid sea level rise along the U.S. East Coast.

As the circulation weakens, pools of warm water form, which can create ocean heat waves, which in turn, can be linked with droughts and heat waves on nearby land areas, according to the article.

The study was published in the journal Nature Geoscience, and primarily focuses on measuring the changes in the volume of the Gulf Stream system.

“If we continue to drive global warming, the Gulf Stream System will weaken further, by 34 to 45 percent by 2100 according to the latest generation of climate models,” co-author Stefan Rahmstorf, a climate scientist with the Potsdam Institute for Climate Impact Research, stated.

Citizen Groups, New AIG CEO

Cake, balloons, and flowers welcomed new AIG CEO Peter Zaffino on his first official day on the job.

However, the welcoming at AIG’s New York headquarters came with a hint from a new environmentalist campaign, which wants Zaffino to end the company’s support for the fossil fuel industry.

“Our newest CEO needs a wake-up call: AIG is torching the planet,” said Pete Sikora, climate and inequality campaigns director for New York Communities for Change. “Peter Zaffino should take AIG into a brighter future by pulling the plug on insuring fossil fuels,”

The gift-bearing delegation included leaders from several groups including 350NYC, New York Communities for Change, Public Citizen, Rise & Resist, Sunrise Kids, and XR NYC.

They say that Zaffino has yet to respond to requests for meetings from the organizations.

According to the groups, AIG remains one of the few companies willing to insure large coal projects.

North American insurers like AIG lag behind their global peers on climate action (for more on that read the “Biden’s Push” section below), but Liberty Mutual, The Hartford, Chubb, and AXIS Capital all have at least basic policies reducing coal underwriting, the groups note.

EU & Increasing Insurance Cover

The European Union is bolstering its 14-trillion-euro ($17 trillion) economy against damage caused by the impacts of climate change.

The European Commission under an updated climate adaptation strategy unveiled last week, is calling for efforts such as better use of climate-risk data, smarter damage prevention and increased insurance coverage, according to a Bloomberg article in Insurance Journal.

The plan is part of the EU’s environmental overhaul, the Green Deal.

“There’s not going to be a successful Green Deal, there’s not going to be climate neutrality in 2050 without a consistent effort into adaptation and mitigation,” said Frans Timmermans, the commission’s executive vice-president.

The new plan seeks better use of data on climate-related risks, stepping up planning to prevent damages, incorporating climate risks into financial frameworks, and it aims to close the so- climate protection gap, or the share of non-insured economic losses – only 35% of the climate-linked economic losses are insured on average, while proportion is as low as 5% in southern and eastern Europe, the Bloomberg article notes.

Biden’s Push

Climate moves by President Joe Biden’s administration could pave the way for more regulatory pressure from federal and state regulators this year on U.S. insurers, which lag behind their European peers in pledging action to mitigate climate change, according to a Reuters article.

Climate advocates sat the insurance industry’s coverage of fossil-fuel projects worsen climate problems (see the section “Citizen Groups, New AIG CEO” above for more on that), while industry stakeholders worry about increased asset and liability risk.

Experts tell Reuters that the Biden administration’s designation of climate change as a crisis could further motivate insurers to voluntarily distance themselves from the fossil fuel industry.

State regulators in California, Washington and New York have already been pushing for more climate action and climate investment disclosures from the insurance community, and

Biden’s endorsement of climate action could push more state regulators to adopt such measures, according to Reuters.

“Advocates want state regulators go beyond demanding basic disclosures to seek detailed data on fossil fuel-related underwriting and investments, to establish stress tests that gauge insurers’ financial resiliency and to shift towards more climate-friendly investments,” the article states.

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Topics Europe Climate Change AIG

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