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®: CRE Regulatory Action of the Week
GAO Warns That Government Is Ignoring Climate Change Insurance Risks
On APRIL 19, 2007, John B. Stephenson, Natural Resources and Environment Director at the Government Accounting Office, testified before Congress on the financial risks to federal and private insurers from climate change. Mr. Stephenson told the Senate Committee on Homeland Security and Governmental Affairs that climate change insurance risks are substantial. He said that private insurers are beginning to address these risks, but federal government insurers are not.
Mr. Stephenson testified that private and federal insurers paid more than $320 billion in claims on weather-related losses from 1980 to 2005. Weather-related claims increased over this 25-year period, and will continue to increase if some climate change predictions are accurate.
Since 1980, the National Flood Insurance Program’s exposure has almost quadrupled to nearly $1 trillion in 2005. Exposure for the Department of Agriculture’s Federal Crop Insurance Corporation has increased 26-fold to $44 billion.
Mr. Stephenson testified that large private insurers are incorporating climate change into their risk assessment practices and strategies, but federal insurers are not. He recommended that
"A strategic analysis of the potential implications of climate change in the
major federal insurance programs would help the Congress manage an emerging
high-risk area with significant implications for the nation’s growing long-term
fiscal imbalance."
Click here to read Stephenson testimony
Click here to read related GAO report
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