The world's second-largest industry, worried about losses related to climate change, offers incentives to 'go green.'
Insurance companies, who like to stay out of the limelight, are becoming leading business protagonists in the assault on global warming.
•Next week, Travelers, the giant insurance firm, will offer owners of hybrid cars in California a 10 percent discount. It already offers the discount in 41 other states and has cornered a large share of the market.
•This fall, Fireman's Fund will cut premiums for "green" buildings that save energy and emit fewer greenhouse gases. When it pays off claims, it will direct customers to environmentally friendly products to replace roofs, windows, and water heaters.
•In January, Marsh, the largest insurance broker in the US, will offer a program with Yale University to teach corporate board members about their fiduciary responsibility to manage exposure to climate change.
The insurance industry's clout is sizable. It's the second-largest industry in the world in terms of assets, and has a direct link to most homeowners and businesses. It insures coal-fired power plants as well as wind farms, so it can influence the power industry's cost structure. With its financial muscle, the industry could help advance the use of new financial instruments designed to allow companies to trade greenhouse-gas emissions in the same way that commodities are bought and sold.
"The insurance industry has the ability to change behavior, policies and communicate with clients," says Nancy Skinner, US director of the Climate Group, which lobbies for business and government action to address global warming.
Some consumers are already noticing a negative effect of this shift. In the past year, some 600,000 homeowners living in a zone that an insurer considers a high storm risk in an era of climate change have seen their policies cancelled or not renewed. This includes coastal areas stretching from Texas to New York. Currently, coastal properties are valued at $7.2 trillion.