CIA-Backed Climate Change Paper Wins Praise

A CIA-backed initiative to consider the financial effects of climate change has won praise from a leading member of the profession.

The Institute was one of the organizations involved in the production of a new report, Determining the Impact of Climate Change on Insurance Risk and the Global Community. The 158-page document, which was written by three climate modelling experts, looks at factors like temporal and spatial scales, interest, judgment criteria, and the desired level of certainty to analyze how climate change can alter the risk management landscape.

It was put together following discussions involving the CIA, Casualty Actuarial Society (CAS), Society of Actuaries, and the American Academy of Actuaries, who have collaboratively commissioned committees to develop or support research in this area and assess potential risk management implications for those who work in insurance. CIA member CIA member Caterina Lindman, pictured above, chairs the Climate Index Working Group (CIWG), which fostered collaboration among the representatives of the various actuarial societies and the climate scientists at Solterra Solutions to produce the report.

Last month it was reviewed by Yves Guérard, who was secretary-general of the International Actuarial Association (IAA) from 1997-2010 and was responsible for forming the IAA Environment Working Group. Writing in The Actuary, the magazine of the UK actuarial profession, he said: "The credentials of the authors and the well-documented scientific contents make this report a highly credible source of information for all actuaries. The global actuarial community is indebted to the four North American actuarial associations for investing time and resources in commissioning this report and in particular to the members of the Climate Index Working Group for providing guidance to the authors.

"The report is targeted at an American audience, where denial of the anthropogenic component of climate change is not rare. Thus the authors were careful in dealing with scientific uncertainty that has been misused to stall action, for example, about smoking, chlorofluorocarbons and ozone depletion. They explicitly state that some existing level of uncertainty is not a reason for inaction, as expressed in article 3.3 of the UN Framework Convention on Climate Change (UNFCCC), to which the US and 194 other nations are parties. The report argues that the use of insurance instruments as means of pecuniary protection is highly resonant with this principle.

"After reading less than half of the first four chapters, I was persuaded that even hard-core deniers would have been converted already. However, scientific data continues to accumulate for two more chapters, providing the scientific background for the development of climate indices, namely the Actuaries Climate Change Index (ACCI) and the Actuaries Climate Risk Index (ACRI)."

Ms. Lindman said: "It was heartening to read these comments from Monsieur Guérard. Remarks like his show that the efforts of all the people who worked on this project will prove valuable to anybody considering the effect of climate change upon insurers and society as a whole. The Climate Index Working Group is looking forward to further serving the community by developing the Actuaries Climate Index and the Actuaries Climate Risk Index."