Global Warming: Is a Plan Emerging? 

VIDEO

 

If you have watched Health Politics before, you know that I believe global warming is one of our most 

pressing health issues. It’s not just about melting ice caps and rising temperatures. That much is 

obvious. 

 

What it really means to you and me is health risk -- to the quality of the air we breathe, to our stable 

water supplies, to our ability to nourish our bodies with food – just about all of the things we need to 

live healthy lives.  

 

Recently, we asked a few fundamental questions: Is anything really being done to address this 

problem? Are we simply studying it and worrying about it? Where are the solutions? Is anyone taking 

action?  

 

What we found is that there does appear to be a gathering consensus, fueled by public and private 

power and dollars -- and still below the radar screen -- that action now must replace words. And out of 

a range of voices, from insurers to environmentalists, from venture capitalists to state legislators, the 

faint outline of a plan to address global warming – seems to be taking shape. 

 

“That’s news to me,” you might say. But look a little closer and you will see some interesting trends. 

What seems to be driving us toward a possible plan is the concept of convergence. Many segments 

of our global society are intersecting with each other, affecting each other, determining each other. 

And global warming provides a good case in point. Here, three very different sectors seem to be 

heading in the same direction – and providing a glimmer of hope: 

The insurance industry, the energy industry, and public policy makers – specifically, the folks who 

create our tax and land-use regulations. 

 

Let’s first take a look at the insurance industry’s role. When it sees a threat, this industry is well 

known for throwing its weight behind policy solutions. Take, for example, the auto insurance industry, 

which pushed for state seatbelt and motorcycle-helmet laws to reduce injuries. Now, U.S. insurance 

companies want to use this same school of thought to roll back global warming.1 Why? Think about it. 

Catastrophic weather caused by global warming has the potential to devastate the insurance industry. 

 

The numbers will help illustrate the point. Last year, global insurance, the world’s largest industry, 

collected $3 trillion in premiums.  U.S. policies accounted for 17% of that, which was $507 billion. Out 

of this, U.S. insurers shouldered weather-related disaster damages of $71 billion, which was 14% of 

their net-premium earnings. That percentage is historic, considering that in the 1960s, catastrophe 

losses were about 1% to 2% of premiums and the average for the 20 years spanning 1984 to 2004 

was 3.3%.1 

 

The difference in 2005 was, of course, Hurricanes Katrina and Rita, which many experts now agree 

were tied to global warming, which is tied to carbon emissions.2 And given the fact that humans like to 

 

live in areas that happen to be most vulnerable to water disasters, plus our general lack of effective 

emergency preparedness and response systems -- the loss of lives, dwellings and insurers’ profits 

were a forgone conclusion. 

 

Needless to say, insurance companies don’t want to see another year like 2005. 

 

As Evan Mills from the Lawrence Berkeley National Laboratory put it, “Insurers are vulnerable, and 

they have a stake in getting out in front of the problem.”1 

 

How are they getting out in front of the problem? By coming up with ways that could reduce the effect 

of catastrophic weather – like through new building codes or land-use policies. Some are even taking 

a more active role in support of the reduction of greenhouse gases. One of the world’s largest 

insurers, Swiss Reinsurance, is offering to underwrite carbon-emission credits, a system of financial 

rewards for businesses investing in emission-reduction projects in the developing world.  According 

to, Ivo Menzinger, head of sustainability and emerging risk management for the company,  “Coverage 

for national catastrophe has been rising for more than 10 years at an average rate of 9.4%.  Climate- 

change mitigation, or anything that helps reduce emission, would be a positive.”1 

 

Action like this by insurers could be a plus for some energy companies – the second of the 

converging sectors. Could it take hold in the United States? 

 

When looking for tipping points -- in this case a coalescence of power and money to confront global 

warming, population migration to high risk areas, and resultant catastrophic loss -- U.S. eyes often 

turn to California for early trends. What's going on there? 

 

Chevron Corp and Aera Energy LLC are the big oil producers in California, where the state has 

passed legislation to cap emission outputs. But California also houses 450 smaller operations. 

Combined, they produce 13% of the nation’s oil, and are tied to emissions in primary production, and 

also in the burning of the fuel by power companies for energy.3 Credits for carbon emission from 

insurance companies would obviously be a plus in this setting. 

 

This takes us to the final sector that’s converging on the growing will to address global warming – 

public policy makers. Again, what’s going on in California is a perfect example.  

 

A voter initiative there, Proposition 87, would have raised $4 billion by taxing oil extracted in California 

to fund research for alternative fuels and spur sales of alternative-energy. Though the proposition 

failed in the November election, 

it received more than 3 million votes statewide and spurred so much debate that policy makers all 

over the country can’t help but take notice. With 45% of voters in favor of Proposition 87 and 55% 

voting against, I’m sure we haven’t seen the last of proposals that are along these lines. There’s 

obviously growing interest and support that will no doubt continue to influence policy makers and 

impact public policy.4   

 

The name of the game, in all of this, is creating and responding to incentives. With the right incentives 

in place, a three-prong plan begins to emerge. Number 1, control emissions. Swiss Reinsurance is 

putting money where its mouth is with its offer to underwrite carbon-emission credits for businesses 

investing in emission-reduction projects in the developing world. And as we continue to see how 

 

 

things play out in California – from emission caps to alternative energy research – the end result is 

what matters ... less carbon in the atmosphere. 

 

Number 2, less energy consumption.  Whether corporate or private, focusing on energy efficiency and 

conservation is a fast and effective way to limit carbonization of our environment.  From “green” 

buildings, to efficient light bulbs, to proper insulation, efficiency efforts such as these could reduce 

greenhouse gases by a third over the next 25 years.1 

 

Number 3, use public policy proactively. A fundamental re-examination of both tax policy and land- 

use policy is required – especially in the wake of Hurricanes Katrina and Rita. As the risk of harsher 

and more frequent bad weather continues to increase in the short term, we can’t continue to put 

ourselves directly in harm’s way. 

 

As the creators of these problems, it is now our collective responsibility to address them. Though 

complex, the concept of converging self-interest among very different economic and government 

sectors may be helping move us in that direction. 

 

For Health Politics, I’m Mike Magee. 

 

 

References 

 

1. Hinton C. Insurers See Global Warming as Threat. The Wall Street Journal. September 27, 

2006. B2B. 

2. Webster PJ, Holland GJ, Curry JA, Chang HR. Changes in Tropical Cyclone Number, 

Duration, and Intensity in a Warming Environment. Science. 2005;309:1844-1846. Available at: 

http://www.sciencemag.org/cgi/content/full/sci;309/5742/1844. 

3. Anders G, Buckman R. Venture Firms Ignite Bitter Fight With Push for California Oil Tax. The 

Wall Street Journal. September 27, 2006. A1. 

4. Tribble SJ. Prop. 87 may still spur energy research. The Mercury News. November 9, 2006. 

Available at: 

http://www.mercurynews.com/mld/mercurynews/news/breaking_news/15973590.htm.