On Climate Change, Big Oil vs…. The Insurance Industry?

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FILE - This Oct. 30, 2012 aerial file photo provided by the U.S. Air Force shows flooding on the New Jersey shoreline caused by Superstorm Sandy. The unprecedented storm surge caused by the storm caused the National Oceanic and Atmospheric Administration to increase the number of storm surge forecasters at the National Hurricane Center starting with the 2013 Atlantic Hurricane season. They will also provide potential storm surge hazards at least 48 hours before the onset of tropical storm or gale-force winds. (AP Photo/U.S. Air Force, Master Sgt. Mark C. Olsen, File)
This Oct. 30, 2012 aerial file photo provided by the US Air Force shows flooding on the New Jersey shoreline caused by Superstorm Sandy. (AP Photo/US Air Force, Master Sgt. Mark C. Olsen)

Our campaign finance system being what it is (or isn’t), it takes big money to move the political needle on an issue. So it would help the cause of those concerned about climate change if an industry-wide interest group with deep pockets were to step up to take on the fossil fuel industry.

Perhaps it will be the insurance business. Insurance companies have heaps of liability in covered assets that will likely be harmed by climate change  — homes in communities vulnerable to floods, for instance, or farms in the increasingly parched Southwest. As these assets become more difficult to protect, insurers are starting to take their cases to the courts.

Farmers Insurance, a major company you probably know from its commercials featuring J.K. Simmons explaining how “what you don’t know can hurt you,” filed nine class action lawsuits last month against nearly 200 communities in the Chicago area. The company argues that the communities failed to prepare for heavy rain and floodwaters, despite dire warnings from researchers and numerous reports from the US government and the UN that climate change is bringing increasingly severe weather. Reuters’ Mica Rosenberg reports that the suits are the first of their kind.

The legal debate may center on whether an uptick in natural disasters is foreseeable or an “act of God.” The cases raise the question of how city governments should manage their budgets before costly emergencies occur.

“We will see more and more cases,” said Michael Gerrard, director of the Center for Climate Change Law at Columbia Law School in New York. “No one is expected to plan for the 500-year storm, but if horrible events are happening with increasing frequency, that may shift the duties.”

Legal experts say the case is something of a long shot for Farmers Insurance. But the hope is that the insurance industry’s battle will eventually extend beyond lawsuits, to lobbying firms and the halls of Congress. David Atkins outlines this scenario for The Washington Monthly’s Political Animal blog.

Right now the insurance companies’ strategy will be to lay the blame on governments for not doing enough to adapt to climate change. Attempts to set that precedent will be very challenging to say the least, and will likely fall short. The next step would be direct political action to support emissions reductions and to back away from coverage commitments.

Something is going to give. If the insurance industry gets serious enough to put enough of its money up to challenge the fossil fuel barons, we might even see some Republicans start to see the light on climate change. Probably not, but one can always hope.

A political-money arms race between insurers and the fossil fuel industry isn’t imminent. The idea that climate change is something that insurance companies will have to contend with is taking hold within the industry, but only gradually. A 2013 report by the environmental investment group Ceres found that only 23 out of 184 insurers surveyed had comprehensive climate change strategies, and 13 of those were foreign-owned.

John Light is a writer and journalist sometimes based in New York. He writes a lot about climate policy, both inside and outside of the US. He was a former associate digital producer for Moyers & Company. His work has been supported by grants from The Nation Institute Investigative Fund and the Alfred I. duPont-Columbia Awards, and has been included in ProPublica's #MuckReads collection. You can follow him on Twitter at @LightTweeting.
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  • Dano2

    I’ve thought for many years that the way to action in the USA was through lawsuits and lawyers.

    I’ve always assumed that Big Oil’s PR campaign was to delay legal action as long as possible until they could get out. IMHO their madcap drilling campaigns are evidence of this last-chance mentality.



  • mograph

    Cynical me says that insurance companies will no longer cover “acts of God.”

  • Jim Bryce

    The idea that insurance will be a major factor in pressuring the fossil fuel industry is on target. However, the really big pressure on them to continue the dance of deception is the prospect that the value of their assets will plummet. Have you wondered why they continue to push for development rights to more and more reserves even when the potential for actually recovering those reserves is far into the future? It all hinges on the value assigned to those and even producing reserves by engineering and economic reports. The values assigned by these reports are the basis for the security value of the assets on the trillions of dollars of loans the financial community has made to the fossil fuel industry. As alternative energy becomes more viable, the value of those assets dives (assuming the economic analysis is legitimate, and it eventually will have to be) and the banks demand more collateral or call the loans. Right now the fossil fuel industry and the financial industry are locked in an inevitably fatal embrace and their leaders will do anything to extend this kubuki theater as long as possible, hopefully beyond their lifetimes. The result, of course, leaves their and our children holding the bag. Welcome to high finance and low down propaganda.

  • http://www.facebook.com/RPManke.solar RevPhil Manke

    Weather related calamities are certainly NOT acts of God. They are acts of nature. That certain minds may take careful action to prepare for these reasonably predictable events may be much closer to the AOG definition. Acts of God always occur in the mind of those who listen. You may believe otherwise because “free will” means you will not be “hurled” into Heaven, but merely guided when you are ready. Because of the ones who have been willing to listen, we are able to move out of the dark ages and the mis-interpretation of holy scriptures, which are not holy at all, but ego driven interpretations to manage religion. Nearly everything you have taught yourself about the world of form is mistaken. You; Your Holy Mind, is Gods one Creation. Understand this, and the entire universe will change direction and flow toward you. It’s “an inside job”.

  • marvin steiner

    The financial giants will not ever foreclose on giant oil–they cannot manage the lender in possession asset any more then they could large agricultural properties during the Great Depression or large volumes of mortgage foreclosures in this last recession.Once again the taxpayer will bail them out of their liquidity trap.

  • JJ042804

    Maybe Republicans change their minds if they find that there is a Prison sentence for willful blindness!

  • JJ042804

    they may see this as an option!

  • mograph

    I can see the Powerpoint now …

  • modern angel 99

    We will move out of the dark ages when we all realize that GOD IS NATURE.

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