My colleague, computer patent guru Robert Plotkin, once referred to insurance as a leading indicator when it comes to the issue of global warming, and I have talked before about the idea that governments and societies will act to curb global warming and to deal with related problems only when we reach the point that these problems pose severe economic problems for major sectors of the economy. I have written before about how truly fundamental this issue is, in particular, for the insurance industry, and about the fact that changes in insurance coverage are likely to be the first major noticeable economic response to the issues posed by global warming.

Now, I recognize that sounds like the sonorous introduction to some Ken Burns special on PBS, but it’s a hard topic to delve into while maintaining a warm and good natured tone. And the reason for that is laid out right here, in this fascinating opinion piece from the Washington Post on the response and thinking of leading elements of the insurance industry, including Lloyd’s, to global warming. The article lays out both the risks to the industry posed by climate change (risks the article describes as going right to the question of the sustainability of large sectors of the insurance industry) and the insurance industry’s response to the problem, which is to call – out of its own self-interest – for governments to address and remediate the problem.

You can get a pretty good flavor for what the article presents as the industry’s perspective on the problem right here, in this quote from the article:  

Ten years ago, Peter Levene, chairman of Lloyds of London, was skeptical about global warming theories, but no longer. He believes carbon emissions caused by human activity are warming the Earth and causing severe weather-related events. "At Lloyds, we feel the effects of extreme weather more than most," he said in a March speech. "We don’t just live with risk — we have to pick up the pieces afterwards." Lloyds predicts that the United States will be hit by a hurricane causing $100 billion worth of damage, more than double that of Katrina. Industry analysts estimate that such an event would bankrupt as many as 40 insurers. Lloyd’s has warned: "The insurance industry must start actively adjusting in response to greenhouse gas trends if it is to survive."

Pretty much what I said here, but I have to admit, the thought’s much more sobering coming from Mr. Levene than coming from a blog post.