Insuring against climate change

The insurance industry has a vested interest in stopping climate change; the extreme weather it will bring (which we discuss in Chapter 7) will result in a huge surge in claims. Knowing that investing today can prevent giant payouts in the future, American International Group (AIG) offers financial support to projects that encourage greenhouse gas emission reductions. AIG says it may invest in forests, renewable energy resources, greenhouse gas mitigating technologies, and green real estate. The Zurich-based Swiss insurance company Swiss RE is also interested in working to reduce and profit from the danger of climate change, and in 2008, it was named "one of the world's 100 most sustainable companies" by Innovest Strategic Investment Advisors.

The insurance industry is actively funding research efforts. In Canada, insurance companies fund the Centre for Catastrophic Loss Reduction at the University of Western Ontario. In Bonn, Germany, the Munich Climate Insurance Initiative (MCII) is helping to develop alternative insurance products that can facilitate both spreading climate-related risks (ensuring that no one insurance company shoulders the burden of paying out for the aftermath of extreme weather events) and adaptation-response measures. Members of the MCII include the International Institute for Applied Systems Analysis, German Watch, the Potsdam Institute for Climate Impact Research, and individuals from the World Bank and Munich Reinsurance Company. The insurance industry largely funds the effort.

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