Insurers should focus on micro-solutions for climate change

In order to respond to the rising costs of climate change-related damages, insurance companies are going to have to focus more on micro-solutions (i. e. on a policyholder-by-policyholder basis), Colin Empke, partner at Blaney McMurtry LLP, told delegates at the Canadian Defence Lawyers 4th annual insurance coverage symposium in Toronto in February 2008.

Empke was speaking on behalf of Anthony Saunders, partner with Guild, Yule and Company, who was unable to attend the symposium.

Empke observed an increasing number of weather-related insurance losses, causing the industry to seek ways to deal with increasing costs and solvency issues.

One set of solutions is known as micro-solutions, aimed at the policyholder level, Empke said. Such solutions approach underwriting and claims on an individual, case-by-case basis; they make more realistic assessments about individual risks and how they might be affected by climate change.

Another approach insurers are taking is the macro approach. This focuses on more general activities that try to change the risk environment by actively promoting climate change activities, such as controlling greenhouse emissions or sponsoring research.

These are admirable goals, Empke said. But while they might assist in slowing the rate of climate change, it’s not going to assist in the short-term. And it’s not likely to affect risk assessment, he added. •