Munich Re earns lead rating for climate risk management practices

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22 October 2014 | Corporate Responsibility

Munich Re earns lead rating for climate risk management practices

A report released by Ceres names Munich Re as one of only nine (re)insurers out of more than 1,000 to earn a lead rating for climate risk management practices.



The report, Insurer Climate Risk Disclosure Survey Report & Scorecard: 2014 Findings & Recommendations, ranks 330 of the largest US insurers that represent about 87% of the US insurance market. The companies were ranked on a series of climate related indicators, including governance, risk management, investment strategies, greenhouse gas management and public engagement. The report is based on company data provided to the National Association of Insurance Commissioners (NAIC).



The report found strong leadership among fewer than a dozen companies but generally poor responses among the vast majority.



“Despite being on the 'front line' of climate risks, most of the company responses show a profound lack of preparedness in addressing climate-related risks and opportunities,” said Mindy Lubber, president of Ceres, a nonprofit sustainability advocacy group. “A big positive in the report's findings is the strong leadership among a small number of property & casualty insurers – a trend that needs to become far more mainstream if the industry is to accelerate global responses to this colossal threat.”



Insurers, observed Washington Insurance Commissioner Mike Kreidler, are in a unique position to manage risks associated with climate uncertainty, including financial solvency.



Munich Re America CEO Tony Kuczinski expressed concern over growth in population and concentrations of value combined with greater risk accumulations and climate uncertainty. "Climate change presents complex risks to the property and casualty insurance industry," he said, "but it also presents a number of business opportunities. We see tremendous opportunity for our industry to take a leadership role in addressing climate change by delivering solutions that not only transfer risk but incentivize its reduction.”



The report cites numerous studies and on-the-ground examples of how rising global temperatures are driving sea level increases, and more pronounced extreme weather events are causing larger damages and losses in coastal and non-coastal areas alike. The insurance sector is on the veritable ‘front line’ of these escalating financial risks, especially property & casualty firms, which often bear the financial brunt of extreme weather losses. Insured losses from Hurricane Sandy alone totaled more than $29 billion.


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