Written by Teresa Zink
There is no question that what is happening to the environment as a result of global warming and climate change poses “tremendous risks for all of us,” as individuals, politically and in the courts, attorney Andrew H. Marks of Crowell & Moring told a group of insurance industry representatives and attorneys gathered Dec. 9 in Philadelphia.
However, Marks said, “They also present tremendous and maybe historic opportunities for a business that is about helping businesses and individuals manage risk and for advising on risk.”
Marks, whose career includes extensive experience in long term exposure claims made his remarks at a panel discussion on “Global Warming and Climate Change, Pervasive Risks & Seminal Opportunities” at the conference on “The Insurance Industry’s Top 10 Risks and Opportunities” sponsored by HB Litigation Conferences.
Joining Marks on the panel was Paul J. Bender of Zurich North America who is spearheading that company’s global warming litigation. Bender focused his comments on the kinds of disputes that have already arisen involving global warming, and what is expected to develop.
Scope of the Problem
Looking first at the scope of the problem and the insurance industry’s response so far, Marks commented that many of the issues arising under traditional general liability policies follow closely those that have been being litigated for the last 25 years in environmental liability coverage cases.
He said ACE Limited Chairman and CEO Evan Greenberg summed the issue up well when he said: “No greater problem confronts mankind than global warming.” He also noted the Supreme Court’s comment in last year’s ruling in Massachusetts v. EPA that “the harms associated with climate change are serious and well recognized.”
Marks said the issue of greenhouse gasses and climate change is not new and that “scientific consensus is pretty much unified that human activities are having a pervasive effect on the environment.” He noted that in a 1995 report the Intergovernmental Panel on Climate Change, a multi-national scientific body operating under the auspices of the United Nations, concluded that “most of the observed increase in globally averaged temperatures since the mid-twentieth century is very likely due to the observed increase in anthropogenic (manmade) greenhouse gas concentrations via an enhanced greenhouse effect.”
The compounds generally referred to as greenhouse gasses are carbon dioxide (CO2), methane (CH4), nitrous oxide (N20) and hydrofluorocarbons. Marks noted that in the 20th Century, there was a documented increase of one degree Farenheit in global surface temperature. The projected increase in the 21st Century is between 2.5 and 10.4 degrees, he said. Calling these projections “beyond scary” Marks said that such increases would have a dramatic impact on all aspects of human life.
Specific insurance-related risks, he said, include supercharged hurricanes, intense wind storms, environmental destruction caused by rising ocean levels and coastal erosion, heat waves, drought, wildfires, flooding and crop loss, and outbreaks of some kinds of diseases. These risks are not imaginary, Marks warned, they are “real and not far off.” For example, he noted that hurricanes and other natural disasters cost insurers $110 billion world-wide in 2005 and that European insurers faced losses of approximately $9 billion in 2007 related to one severe winter windstorm.
Many insurance carriers have begun to proactively address the issues that may arise out of losses related to global warming and climate change, including looking at new products, underwriting and risk assessment. He said that the insurance industry “is a bit ahead of the curve in many ways,” in recognizing the “real risks and real opportunities” connected to global warming.