Insurance and Climate Change column

Global Warming Exceeded Benchmark Over 12-Month Period for First Time on Record

By | February 9, 2024

Global warming exceeded temperatures of 1.5 degrees C over a 12-month period for the first time in record keeping.

The European Union’s Copernicus Climate Change Service released its findings in its Global Climate Highlights 2023 report on Thursday, calling out the 1.5 degree C benchmark set out by the Paris Agreement set in hopes of limiting the effects of climate change.

“2023 marks the first time on record that every day within a year has exceeded 1°C above the 1850-1900 pre-industrial level for that time of year,” the report stated. “Close to 50% of days were more than 1.5°C warmer than the 1850-1900 level, and two days in November were, for the first time, more than 2°C warmer.”

Last year was the planet’s hottest year in global records going back to 1850, while extreme weather events of last year have continued into 2024, C3S said.

The year-to-year increase in global-average temperature was exceptionally large from 2022 to 2023, following a transition from three years of La Niña (2020–2022) to El Niño conditions in 2023, although other factors appear to have also played a role, the C3S stated.

Other key messages in the report include:

  • 2023 had a global-average temperature of 14.98°C, 0.17°C higher than the previous highest annual value in 2016
  • 2023 was 0.60°C warmer than the 1991-2020 average and 1.48°C warmer than the 1850-1900 pre-industrial level
  • It is likely that a 12-month period ending in January or February 2024 will exceed 1.5°C above the pre-industrial level

Category 6

A team of scientists wants the world to consider category 6 hurricanes in a scary, but well-reasoned, paper that points out the weaknesses of the current Saffir–Simpson scale in a world where climate change has made extreme weather a more frequent occurrence.

The scientists say that because the scale is open-ended and doesn’t extend beyond category 5, which are maximum sustained winds above 156 mph, its weakness becomes amplified in a warming world.

They make a simple extrapolation of the Saffir–Simpson scale to define a hypothetical category 6, and then describe the frequency of tropical cyclones in the past and those projected under global warming that would fall under the new category.

“We find that a number of recent storms have already achieved this hypothetical category 6 intensity and based on multiple independent lines of evidence examining the highest simulated and potential peak wind speeds, more such storms are projected as the climate continues to warm,” the paper states.

A category 6 is ominous if one considers the description of a category 5. The scale was introduced in the early 1970s by the U.S. National Hurricane Center. The National Oceanic and Atmospheric Administration describes a category 5 as:

“Catastrophic: Complete roof failure on many residences and industrial buildings. Some complete building failures with small buildings blown over or away. Power outages for weeks or months.”

Since global warming has increased the energy available to intensify tropical storms from warmer ocean temperatures, “storm intensities well above the category-5 threshold are being realized and record wind speeds will likely continue to be broken as the planet continues to warm,” the paper states.

Insurer Investments

Insurers companies could face billions of dollars in losses if they stay on the current course of investments that contribute to climate change, at “a scale exceeding some of the worst wildfires in California’s history,” states the findings of what is being called the first-ever “stress test” of insurance company investments by insurance regulators from California, Oregon and Washington.

The report was released on Tuesday. It analyzes transition risks from assets controlled by insurance companies licensed in California, Oregon and Washington earning more than $100 million in national premium. It warns that companies that do not have effective long-term plans in place would face higher costs in the event of a “transition shock,” or a revaluing of fossil fuel-related assets as the world economy moves to cleaner technologies, and shows losses could range from $7 billion to $40 billion on corporate bonds in coming decades.

Findings include:

  • Expected losses for corporate bonds related to coal, oil and gas, power, and automotive sectors increase dramatically the longer the transition is delayed.
  • Exposure of investments to fossil fuel extraction varies widely. The average was 4.5% across all insurance companies, but some have up to 95% of their corporate bond portfolio and 30% of their listed equity portfolio in climate-exposed assets.
  • Life insurers have the most value invested in the oil and gas extraction sector ($150 billion), while property/casualty insurers have the smallest share of their listed equity portfolio value in oil and gas extraction (less than 1%) amounting to $6 billion in assets.

Denni Ritter, department vice president, state affairs Western region with the American Property Casualty Insurance Association, called attention to the fact that the P/C industry has a very small investment exposure, as documented by the report.

Ritter noted that insurers have an ongoing interest in credit worthy green technologies and companies, and that the current focus must be on mitigation.

“As experts at analyzing and understanding risk, insurers take climate-related issues very seriously and have taken significant steps toward adjusting their business models accordingly; insurers are taking a variety of approaches to their investment choices, and that diversity adds strength and stability to the market; property casualty insurers have small percentages of their investments held in fossil fuel-related assets; insurers have invested in a variety of technologies that support the energy transition, including renewable energy and electric vehicles,” Ritter said.


A hundred-plus climate groups wrote to the biggest banks, insurers and private equity firms backing liquefied methane gas, demanding they follow the change in U.S. policy on the LNG sector and to end their financial support.

The organizations, including Texas Campaign for the Environment, Sierra Club, Rainforest Action Network and Friends of the Earth, cite financial risk and reputational damage through continued funding of LNG.

The letters went to US, Japanese, Canadian and European banks, insurance companies and private equity. The companies include Citi, Bank of America, Royal Bank of Canada, Chubb and Liberty Mutual.

The groups are demanding an end to funding and insurance underwriting for new and expanding liquified methane gas projects and their parent companies. The groups gave the recipients until February 15 to reply.

Their argument is that without the backing of financial institutions, LNG expansion would be unviable.

According to the groups, the top 60 banks have provided $122 billion in loans and bond underwriting to LNG projects and companies involved in the sector since 2016. Fossil fuel insurance earned the industry around $21.25 billion in 2022, and nearly 86% of the operating LNG export terminals in the country have some private equity investment, according to the groups.

Past columns:

Topics California Trends Climate Change

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