Climate Change: Marketplace is the First Responder

Ken Silverstein | Dec 19, 2012


For a few years, matters involving climate change have been nestled behind a darkening economy. Now, though, the subject is re-emerging, hastened by Hurricane Sandy and who will pay for the associated liabilities.

Uncommon weather events are occurring with increasing frequency and are causing an enormous human toll and economic hardship. The marketplace has become the first-responders here, sidestepping a congressional stalemate. As such, insurers are pricing climate change risks into their policies while businesses are taking either mandatory or voluntary steps to cut their emissions. The result is now the platform from which to tackle the challenges posed by the earth's warming.  

Addressing the phenomenon is similar to how Americans eventually coped with the domestic tobacco industry, says Randy Evans, co-author of a book called “Climate Change and Insurance.” That is, for decades cigarette makers warded off litigation and warning labels, which eventually gave way to a U.S. surgeon general report that pronounced smoking “a” cause of cancer. The courts then relaxed the causation standard, enabling some successful lawsuits to change how that sector now does business.

Evans, a Republican who served as outside counsel to the U.S. Speakers of the House during the 104th through 109th Congresses, says that he does not believe that the global environment is at a “tipping point.” But he does say that it is at a “median point” whereby all political and business leaders must manage the apparent risks. An obvious sticking point is whether man-made emissions from fossil-fired power plants are adding to the level of heat-trapping emissions.

“Man-made emissions are ‘one’ cause,” says Evans, also a lawyer with McKenna Long & Aldridge in Washington, DC and Georgia. “Maybe it is a significant cause but it does not have to be ‘the’ cause -- if you follow the tobacco analogy. If it only has to be ‘a’ cause, there should be some accountability: Why shouldn’t those who profit the most share their profits with those who suffer the most?”

Evans, who spoke to this reporter by telephone, says that the trend toward collective action is similar to a “beehive” whereby a swarm of activity exists that it is generally headed one way. Independently, a steady and unyielding movement is pushing for action on climate change. And it’s coming from shareholders, insurers and ordinary citizens, he says.

Major Movers

Unlike the prolonged tobacco fights, Evans says that the battle to reduce global warming emissions will be shorter. With the ubiquitous nature of the internet and cable that allow for the immediate flow of information, the time frame will get compressed down to “a decade.”

The clock has been ticking. Shareholder activism, for example, is forcing companies to adopt more environmentally-friendly policies: Evans notes that those demands have increased four-fold over the last four years. To boot: The U.S. Securities and Exchange Commission says that corporate boards are obliged to report climate risks so that they can be fully evaluated by investors.

According to a report by Ceres, which is a group of investors interested in sustainability, 96 of the combined 173 companies in the Fortune 100 and Global 100 have set immediate greenhouse gas reduction targets. Only a third of them, however, have longer-range plans.

Insurers, meantime, are now pricing those risks into their policies. Evans says that Munich Re and Swiss Re are among the major providers that actuarially measure climate hazards. Consider: In 2011, 14 major weather events occurred costing at least $1 billion each, says the National Oceanic Atmospheric Administration. Sandy alone is expected to run $20 billion. Droughts, earthquakes, floods, tornadoes, thunderstorms and wildfires are active and having widespread effects.

“Whether stakeholders succeed in achieving mega-tort recoveries remains to be seen, but in any case, insurers risk spending substantial sums on their legal defense and should seriously consider mitigating climate change exposure,” says Walter Stahel, head of risk management research for the Geneva Association.


To that end, insurers are a major mover. So are those shareholders interested in sustainability. But they are following the gyrations in weather patterns as well as the scientific community's cues, which have also enabled EPA greenhouse gas regulations -- laws that have been upheld by the federal courts. As a result, the various moving parts are aligning and trying to dull the impact of climate change.


Twitter: @Ken_Silverstein

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Just got back from LBI, southern NJ

Long Beach Island is an 18-mile long barrier island, off the coast of southern NJ.  For centuries, the geography of the island has been altered by hurricanes, Nor'easters, and tides.  Beach replenishment is an ongoing task; beaches are not private property, they are there for full-time residents, vacation home owners, tourists who want to rent a place during the summer, and day trippers.

My mother lives year-round in a small house in Harvey Cedars, at an extremely narrow part of the island.  During Sandy, she and her dog stayed with a friend on the island, further north in Barnegat Light.  Harvey Cedars is one of several boroughs which participated in the beach replenishment project.  There were a few holdouts, homeowners who would not allow the surveyors needed for the project, easement access to take sightings.  These beachfront homeowners filed lawsuits against their various towns and boroughs (including Harvey Cedars) over the replenishment project.

Why?  According to them, the project would "spoil their view," and lower their property value.  Some also had the crazy idea that "boardwalks would be next," and they certainly couldn't have their view of a public beach spoiled by the riff-raff.

Well, some boroughs caved in to the lawsuit threats and did not participate in the replenishment project.  Harvey Cedars has been ordered to compensate these homeowners for loss of view (there was no loss of view), and lowered property value.  Harvey Cedars has appealed the decision.

After driving the length of the island, it was obvious that the areas which had the beach replenished were spared.  Including my mom's house, where the island is only two blocks wide!  Her house and yard were untouched, other than having to sweep up a few pine needles.  North Beach, just south of Harvey Cedars?  Destroyed.  Further south, Holgate was in terrible shape (but Holgate always gets battered).  Beach Haven suffered a lot of damage, as did Loveladies just north of Harvey Cedars.

Unfortunately, the people complaining were not the only ones to suffer damage or loss of their homes.  Other residents suffered, due to the few with oceanfront property and their attorneys (and the decision makers who caved).  Now people who had houses in the areas where the dunes were breached have neither a house, nor a view.

The people complaining in Harvey Cedars, still have both.  Thanks to the project.  I think Harvey Cedars's appeal has merit.  What say the readers?

Incidentally, I've witnessed many storms over the years, having grown up there.  I well remember the storm of March 1962.  All barrier islands are at risk, and beaches are replenished constantly, to protect structures and tourism.  We do this so that people can continue to enjoy our fantastic beaches for many years to come.  Erosion and storms are due to weather, and natural processes.  Not human-caused climate change.  Experience the fury of one of these storms.  Anyone would be humbled by such power.  Human beings who believe we can cause or prevent such things are arrogant.  All we can do is mitigate the damage, clean up, and rebuild.  And buy insurance!

Wendy Ellis, Las Vegas, NV

Want to take risks? Quit

Want to take risks? Quit paying insurance on your home and cars, which you probably have to have to meet state laws. They are yours and nobody cares if you lose them unless you ask the government to bail you out. Dont take risks with the environment which we all share, however. Randy Evans makes some common sense suggestions. Everyone plays a small role to avoid a catastrophic claim on the back end. Those disagree, please explain your problem with that. You cite a few fossil fuel paid scientists who publish on Fox TV and industry publications as your experts. What about the majority of others who disagree? Listen to Evans.

Climate Change: The Marketplace is the First Responder

The HUGE story on global warming is the leaking of portions of the IPCC's draft AR5 report. The leaked information indicates that, even within the IPCC, there is a recognition that there are serious problems with the ‘scientific’ basis for CAGW (catastrophic anthropogenic global warming) theory. But Energy Central puts out a story on insurance premiums rising due to more frequent and severe storms caused by CAGW (a meme that is easily debunked). Wow! Talk about a lack of perspective.

Disconnects between insurance and climate

I don't perceive that this article treats the range of criteria necessary determine the scientific veracity of manmade climate change. It nonetheless makes sense to avoid CO2 emissions due to the devastating prospect of cumulative ocean acidification destroying vital marine food chains - essentially forever - beginning around mid-century. Yet that development not even on the radar of the insurance industry due to disconnects between its practices and much of geophysical reality. The insurance companies concentrate on matching the premiums of their customers with damage liabilities incurred by natural disasters. Munich Re and others have pursued this policy for over two decades in Europe, where there have been a number of catastrophic events during that period. Yet even when meteorologists appeared on television in 2002 to discount any correlation between disastrous flooding of the Danube, Moldau, and Elbe Rivers with the progress of global warming, pricing the climate risks has remained an accepted way of keeping the insurance industry solvent. No amount of money is going to prevent the Arctic ice cap from melting. There would continue to be hurricanes, floods, and droughts in a world run completely on renewable energy. Since the system of polluter pays would then break down, its validity should be questioned today. CO2 is often emitted with the objective of repaying commercial debts, so it could prove more efficient to circumvent the insurance industry entirely and pay off creditors at the source in exchange for intensified efforts toward the survival of civilization. Insuring seacoast properties is chiefly sustaining the building construction industry in the affected regions following increasingly recurrent storms. That is an extremely expensive and only locally beneficial endeavor compared with divorcing the world from coal power. If society doesn't have the money to do both, which should it choose?


There are 147 surface temperature measurement stations in the world, all in the new US Climate Research Network, which are sufficiently well sited, installed and maintained that the DATA can be used without adjustment. Once the DATA from the rest of the global surface temperature measuring stations have been "adjusted", they are no longer DATA; rather, they are undata, which are then aggregated to become the global temperature record. There are estimates that up to half of the global temperature anomaly exists in the adjustments, rather than in the data. That is atrocious. Measuring temperature with high accuracy and precision is not simple, but it is hardly brain science or rocket surgery.

The climate science "magicians" not only appear to believe that they are the modern day Rumpelstiltskin, able to spin bad data into an accurate global temperature record, they also appear to believe that they can "out-magician" Rumpelstiltskin by turning missing data into a comprehensive global temperature record. I am not sufficiently credulous to accept that.

More Bravo!

Thank you for the hard data.  I had read highlights of your point, but it is nice to see the graphs.  Sandy will be a bully pulpit, but it is far from proof; e.g. without the high tide, an arctic northeaster, and too much development on vulnerable coast lines, Sandy would have been a routine storm.  None of those can be blamed on global warming.  DDixon

Some "Minor" Problems

The global average surface temperature has not increased over the past 16 years, despite continued and increasing global annual CO2 emissions; and, continued "hand-wringing" on the part of the climate science community.

There is no SCIENTIFIC linkage between "uncommon weather events" and the non-existent global warming of the past 16 years. Hurricane and tornado frequency and intensity are both well below historical maxima.


The model predictions of warming presented by the IPCC since 1990 show far greater warming than has actually occurred. (See below.) This demonstrates that the models and the hypotheses on which they are based are flawed.

So much for the "settled science" consensus.



Another point.  If one looks up the record highest temperatures by state in the US, many were set in the early 1900's--ie 1900 to 1950.  It seems strange that we are allegedly recording record high temperatures in so many places but the single point highest recoreded temperatures are not being exceeded.

While I agree there is climate change, the climate has always been changing.  While I agree that mankind's CO2 production impacts climate change, I do not think it is the principal cause of climate change.  While I agree that we need to take steps to reduce CO2 emissions on a per MWh basis, bankrupting the economies of the OECD countries developing 'green' energy while the developing countries do whatever they want is not the way to do it.