Digital Diatribes

A presentation of data on climate and other stuff

Midwestern Actuarial Forum Presentation – Implications of Climate Change to Insurers

Posted by The Diatribe Guy on September 26, 2008

I know how jealous you all will be, but yesterday I had the pleasure of attending the Fall seminar of the Midwestern Actuarial Forum. I thought I would highlight one part of the meeting, which was a presentation by representatives from Deloitte Consulting, entitled: Changing with Climate Change: An Insurance Industry Study. This link shows that agenda item, in case you don’t believe me.

The presenters of this study were three actuaries. They are credentialed actuaries. I am sure that they are fine people and do quality work for their firm, and this is not an attempt or effort to in any way undermine their work as actuaries. I am also an actuary. I know well that I am not a climatologist, that my view of the subject is subject to ever more scrutiny than that of a climatologist, and that no matter what I do or present, there will always be a skepticism (some healthy, some simply dismissive without consideration of the presentation itself) that I cannot possibly know the full story behind temperatures and data and models because I am not a climatologist. OK, I understand that. But, in fairness, if I am so easily dismissed, then the same standard should be held up to other actuaries who start talking about climate change.

Since I can understand and appreciate that criticism, I chose instead to not go there. Instead, I was very interested in what they would actually present, and in what context.

It would be an understatement to say I was extremely disappointed with this presentation, and I honestly was embarrassed that it was presented by actuaries to actuaries. Again, I think this is NOT necessarily an actuarial issue, and so it does not speak to their abilities to evaluate reserves, price products, value companies and pensions, or do whatever else they may do in their firm. I wish there was a copy of the presentation online that I could link to so I could demonstrate my concerns. Should there be a link to the power point that goes up I will direct you to that.

To the credit of the presenters, they did not present themselves as experts. They clearly were not, but at least they did not try to pass themselves off as such. I also note that they did caveat their remarks with the fact that there are some who are skeptical of the conclusion about Global Warming (which basically equated Global Warming with Climate Change, as is usually done).

It was clearly obvious, though, that the presenters were less inclined to consider dissenting opinions than to present evidence for Global Warming. And while noting that there is debate about whether or not Global Warming has anthropogenic causes, the comment was finally uttered that went something like this: “Despite all that, there’s like 95% agreement between scientists that we do cause warming.”

And that is where my disappointment primarily lies. You see, insurance companies have an interest in assessing risk. If the climate is changing, then we need to analyze the potential impact this has on future losses. So be it. Understood. But what is disconcerting is that this is NOT where the focus of the conversation is. In fact, in that regard, the main conclusions are that the best we can do is test unknown possibilities of certain things occurring. And while this was alluded to, the primary message of this whole thing came down to PR and public perception, as follows:

1) It’s clear the earth is warming. And, like, 95% of scientists think we cause it. We have no source for this number.
2) Here’s a chart on how Carbon Dioxide gets into the air. Can anyone here explain it? (I’m not kidding…)
3) Really, it doesn’t matter what’s true, if the public thinks there is man-made global warming (Of course, they think it’s true because presentations like these represent it as true, despite the little caveats and “balance.”)
4) Here are some charts. One is the discredited “hockey-stick” chart, one is the HadCrut data (which was labeled as starting in 1855, even though it should have read 1850, and for some reason didn’t go through the current period) which admittedly shows warming. But it shows this warming steadily since 1850. There is no hockey stick. There was no SUV in 1850. All that stuff.
5) Companies may be sued in the future if they do nothing about combating climate change.
6) Here are some things we can do: Who here has taken their Carbon footprint? (I kid you not, the only three people in the room, there were over 100 people there, who had done it were the three presenters).

My main takeaway from this is how silly it all has become. I do not criticize the presenters as actuaries. I do believe, however, that they should have stuck strictly to the insurance ramifications of things rather than make an attempt to present a case for the actuality of Global Warming. Also, I felt it reached the point of advocacy for “green” issues by the end of the presentation.

Of concern, though, is that the National Association of Insurance Commissioners has a Climate Change task force. This is more than a mere assessment of insurance risk. This is about Financial Statement disclosure about what companies are doing to combat climate change. This is about carbon offsets. This is about integrating the scaremongering about climate change into the legal system so that someday anyone and everyone who is perceived as having not done enough about Global Warming is subject to a lawsuit. It is remarkable.

In fact, that presentation in conjunction with the last one, where we find that Actuaries can be subject to disciplinary action for such ambiguous phrases as “misrepresentation” got me to thinking that this very blog may not pass political muster at some point. It matters not that my analysis is entirely objective. Any personal opinion that I offer that seems to dismiss the crisis of catastrophic Global Warming may be subject to discipline if things tip too far to the whacky side of the world. Don’t for one second believe that political leanings do not affect professional organizations.

I’m really not worried about that in the immediate term. I believe such risk is minimal at the moment. But stranger things have happened. It won’t stop me from continuing to present the data.

4 Responses to “Midwestern Actuarial Forum Presentation – Implications of Climate Change to Insurers”

  1. John Nicklin said

    You are right, the whole thing is getting silly.

    Anyway, I don’t think we can “if” climate change is happening, we know that the climate has and always will change. Climate statis would be alarming, but not climate change. The real issue, I would think, from the insurance sector is how do you argue against any threat of suit stemming from the anthropogenic component, if that compnent actually exists. Greening of the insurance sector is not likely to be a defence when fighting a big payout in some future settlement. The courts aren’t likely to care how green your insurance business is, they will, instead, focus on how un-green your client’s business is.

    You know the industry better than I do. Good post and thanks for the inside look.

  2. hyonmin said

    Thank you for the post. Silly or not, the fact that you feel your free speech is under a cloud suggests that this political movement has gone too far. How would the average insurance company defend the hockey stick if hit over the head with it.

  3. syncUsacype said

    Hi guys,

    I am enw on this antastic forum
    and just would like to introducee myself hhere.


    Confederation TimeframeArticles Of Articles

  4. wreveMose said

    buy Asacol New York

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: