Insurers urge private sector involvement and industry reporting standards for CO2 emissions reduction

Insurance executives, speaking on behalf of about 80 insurers from around the world, addressed climate change negotiators in Buenos Aires on 3 November, to urge for feasible and applicable market incentives to reverse the current trends in climate change. With annual revenues of over US$2 trillion, the concerns of the insurance industry will be hard to ignore.

The insurance industry has suffered from a series of “billion dollar” storms since 1987. This has led to a strong increase in claims. Property insurance is particularly affected, while changes in human health may affect the life insurance and pension industries.

“Insurers know from experience how expensive it can be when people fail to protect themselves adequately from risks and do not take preventive measures where those are possible and necessary,” said Klaus Toepfer, Executive Director of the United Nations Environment Programme (UNEP), which is working closely with the industry on a number of climate change related initiatives. “Being involved in the discussions here in Buenos Aires simply makes good economic sense,” he said.

The insurance industry is particularly concerned that should negotiations fail to provide clear guidance on how to make the three Kyoto mechanisms workable, private sector involvement could be very limited. A whole set of issues, say the executives, need to be clarified before financial services providers would feel that they are attractive to businesses.

The insurers also called for the creation of acceptable reporting standards for industries and have proposed a CO2 Indicator under the auspices of the UNEP Insurance Industry Initiative on Sustainable Development and the Environment.

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