GAO Urges Federal Climate Change Plan
The U.S. Government Accountability Office (GAO) released a report and urged the White House to prepare now for flooding and other natural disasters brought by global warming.
Although there is no coordinated national approach to adaptation, several federal agencies report that they have begun to take action with current and planned adaptation activities. These activities are largely ad hoc, and fall into categories such as information for decision-making, federal land and natural resource management, and government-wide adaptation strategies, among others.
GAO’s report suggests federal agencies, working with Congress, state and local governments, should "develop a national strategic plan that will guide the nation's efforts to adapt to a changing climate.''
GAO’s report references the National Research Council, which stated individuals and institutions—possibly insurers—whose futures will be affected by climate change are unprepared both conceptually and practically for meeting the challenges and opportunities it presents.
“In this context, adapting to climate change requires making policy and management decisions that cut across traditional economic sectors, jurisdictional boundaries and levels of government,” the report states.
How a national plan would affect P&C and reinsurance actuaries remains to be seen. However, there is a growing debate over the causes and effects of a changing global climate, and the insurance industry recognizes the significance of responding to this inherent yet developing risk.
“Insurers have and will continue to address this challenge based upon the available science, data, technology and risk management strategy appropriate and applicable to maintain the necessary financial standing to meet their current and future obligations,” according to Property Casualty Insurers Association of America.
In fact, insurer regulators have taken the issue to government bodies. Earlier this year, Sean Dilweg, insurance commissioner of Wisconsin, testified on behalf of the National Association of Insurance Commissioners before the U.S. Senate Committee on Commerce, Science and Transportation. “Insurance regulators need to recognize that the risk of weather-related losses on real estate is complex,” he said. “It can arise not only from declining asset values, but also the costs of fortification, physical damage to structures, and associated business interruption.”
Dilweg said that insurance regulators should help mitigate the impact that climate change will have on insurance. “It is imperative regulators examine how climate change will impact the investments insurers hold, and establish applicable regulatory standards for the investment practices of insurers,” he said, adding that there needs to be incentives for policyholders to engage in practices that will limit losses.