Lloyd’s Releases Second ‘360 Report’ on Climate Change

Lloyd’s has released the second installment of its “360 Climate Change” series, entitled “What next for climate change?” Last June it published the first installment, entitled “Climate Change, Adapt or Bust,” which warned insurers to face up to the growing threats involved or risk being “swept away.”

Lloyd’s is providing both technical knowledge and insights to help understand and contain the effects of global warming. In this installment its market experts “highlight the key projects insured in the market that will contribute towards a sustainable future, said the announcement. “This includes ‘waste to energy’ plants, which burn household and industrial waste to give off gas and generate electricity, and wind farms, which are proving a major source of renewable energy.”

The report notes that the Lloyd’s market provides about a third of the insurance for waste to energy plants, and covers about a quarter of the world’s wind farms. Lloyd’s is also setting up a new team of experts to help its insurers prepare for and manage the growing risk of climate change.

Trevor Maynard, Lloyd’s manager of emerging risks who will lead that team, commented: “Climate change is a very real threat. It would be unthinkable for us to ignore one of the biggest dangers we face in the coming decades. Among other things, this market recognizes the importance of developing new technology to create renewable energy.”

He added: “At Lloyd’s, we will help to keep the market up to date with all the latest findings and thinking on climate change, analyze the resulting risks, and spread best practice to help every market firm deal with them. Adapting to climate change should become business as usual.”

The “What next on climate change?” report also highlights a range of measures the market is taking to tackle the growing threat. Lloyd’s listed these initiatives as follows:
— Forming a series of partnerships with leading professional, academic and government experts to better understand the risks involved. This network is being developed through a new organization called the Lighthouse Risk Network;
— funding Ph.D. research posts specializing in climate change, including one at the London School of Economics and Political Science; and
— reducing its own carbon footprint by making changes to the energy usage of the Lloyd’s building in London, and moving its Kent operation to a new office with energy-saving features.

The presentation was followed by a debate, chaired by broadcaster Sir Trevor McDonald. Lloyd’s noted that it “brought together some 200 executives from insurance, business, government and science to discuss the repercussions for insurers and businesses.”

What next on climate change? provides the highlights of this debate and gives news on some of the key things Lloyd’s is doing and the scientific developments it is insuring. The full report is available on the Lloyd’s Website at: www.lloyds.com; or on the 360 Report Website at: http://www.lloyds.com/News_Centre/360_risk_project/

In a direct challenge to the rather phlegmatic stance large numbers on Americans seem to have adopted on global warming and climate change, Maynard noted: “We are investing in research to better understand climate change and its impact. We will also be taking the debate to the US – where opinion differs widely on this.”

In conclusion Lloyd’s cited the expressed opinions of three highly respected business leaders concerning the global warming debate as follows:
— From Thierry Desmarest, Chairman and Chief Executive of French energy group Total: “There might be major adverse consequences for agriculture, ecosystems, biodiversity and lifestyles…A major problem in the coming decades will be balancing the continued use of large amounts of oil, gas and coal with a reduction in carbon dioxide emissions.”

From Dr. Robert Hartwig, Senior Vice-President and Chief Economist [and soon to be President] of the New York-based Insurance Information Institute: “While the rest of the world has signed onto this debate, within the United States itself, the debate is very, very active indeed…It shows no sign of being settled within the US scientific community, and certainly within the political community, anytime soon.”

From Lord Levene, Chairman of Lloyd’s: “Fierce debate still rages about the extent and rate of climate change and its likely impact. This creates uncertainty and that in itself means greater risk. Insurers need to take action now to manage it. They need to invest more in research to understand climate change better.”

Editor’s Comment: The IJ publishes articles about climate change, global warming and greenhouse gasses because the vast majority of insurers, agents and brokers have come to recognize that their potential impact may profoundly affect the entire insurance industry. Although the existence of global warming may remain controversial in the minds of many, the insurance industry cannot afford to take the accumulating body of evidence that the world is in fact getting warmer lightly.

Such diverse entities as the UN, NASA, the U.S. Army, the European Union, and others – not to mention insurers and reinsurers – have accepted global warming as fact. They are not tree huggers or environmentalist nuts. Nevertheless, a number of comments, posted on the IJ Website in response to these articles, attack them as “junk science” or “left-wing propaganda.” The IJ reports the news, and stories like the one above are news in every sense of the word.

Those who fault the IJ for reporting them would seem to be simply trying to kill the messenger who brings them news they don’t want to hear. It might also help potential commentators to actually read some of the studies about which we’ve published articles. Google the IJ Website under “climate change” or “global warming,” and you will find all the links you need. Then make your comments.