Our planet’s climate is changing. It is changing faster and with more dangerous results than many had hoped for. Our only chances of averting relentlessly catastrophic results will be to acknowledge our part in the climate change we see around us and work to use our technological innovations to create new infrastructures, while attempting to slow down a process we have helped to manufacture. That’s all. Unfortunately, there are still incredibly selfish and greedy people working with lots of power and money and influence to muddy this global reality. But even the people that make most of the money know that “business as usual” will not be able to continue on without acknowledging and dealing with our changing climate.
Chubb Ltd.’s CEO Evan Greenberg heads one of the largest property insurance companies in the world. Chubb Ltd. handles a lot of commercial and private properties around the world and brings in revenues in the billions of dollars, annually. In the company’s 2018 annual report, Greenberg has a few important things to say from the property insurance perspective.
While the natural catastrophes of last year did not reach the same magnitude as the record–setting levels of 2017, it was a major year for CATs nonetheless, with insured losses estimated in the range of $80 billion, likely the fourth highest in 50 years. To me, as notable were the sheer number of natural events, which exceeded ’17’s total, the almost biblical range — wind, fire, flood, quake — and the diversity of places from which they originated — the U.S. (hurricanes, floods, wildfires and winter storms), Japan (typhoons and earthquakes) and Hong Kong, China and Australia (typhoons), to name a few. For Chubb, pre–tax net catastrophe losses were significantly lower this year — $1.6 billion compared to $2.7 billion in 2017 — but about $700 million more than we planned for when calculating our “expected” CATs for the year.
Greenberg, as this is an annual report, is happy to say his company wasn’t financially crippled. However, the way that things are changing with the climate is clearly terrifying people whose life’s focus is insuring people and global businesses—in part—from natural catastrophes. Highlighting climate change as the top most important issue facing not only his industry but the world, Greenberg explains that governments are
Climate change is a reality and its effects can be seen by an increased frequency and severity of natural catastrophes. Climate change is contributing to higher sea surface temperatures, rising sea levels and an increasing trend in extreme weather events, including floods, droughts, winter storms, heat waves, wildfires and hurricane intensity. These weather events are colliding with the realities of urbanization — the growing exposures from the concentration of people and values created by the long–term shift from rural to urban living, including suburban sprawl — and so many located near water and wilderness because that’s where people want to live. Add to that government social policies that insulate people and society from the true costs of their decisions. Hurricanes Florence, Michael and Harvey were significant events causing record flooding in the U.S. Meanwhile, 2018 was the deadliest and most destructive wildfire season on record in California following ’17’s record–setting wildfires. Given the long–term threat and the short–term nature of politics, the failure of policymakers to address climatechange, including these issues and the costs of living in or near high–risk areas, is an existential threat.
Greenberg is not simply telling his shareholders that this issue is sad for property alone, he’s pointing out that big changes with the climate with no action on the part of countries will likely lead to all kinds of anti-big business bugaboos being out of big business control.
Both current and future foreign operations could be adversely affected by unfavorable geopolitical developments including law changes; tax changes; changes in trade policies; changes to visa or immigration policies; regulatory restrictions; government leadership changes; political events and upheaval; sociopolitical instability; social, political or economic instability resulting from climatechange; and nationalization of our operations without compensation.
What’s pretty powerful here is that Greenberg is laying out the true self-destructive nature of big businesses’ greed. If they cannot turn climate change into the status quo for not only themselves but the governments they influence, the future “status quo” will not include them.