AIG Adopts First Policy on Global Climate Change
Planetark.org, May 17, 2006
NEW YORK - American International Group Inc. this week became the first major US insurer to adopt a policy on climate change, saying it would develop projects to keep greenhouse gases out of the atmosphere.
The policy doesn't use the controversial term "global warming," but AIG, the world's largest insurer, said scientific consensus showed "human activities" are the likely cause of greenhouse gases.
AIG put up the policy on its Web site on Monday with no publicity. Company officials acknowledged it was a new initiative but declined to elaborate.
The policy acknowledges the harmful effects of greenhouse gases, which include auto emissions, factory pollutants and other gases that trap heat inside the earth's atmosphere and cause water temperatures to rise.
Warmer water has in turn spawned hurricanes, which have hit the US Gulf Coast with record storms in 2005, causing more than US$100 billion in damages.
"This is an important step that signals to the market and policy makers that climate change is a critical insurance issue," said Mindy Lubber, president of Ceres, a national coalition of investors and environmental groups.
AIG's stance came only two days before its annual meeting on Wednesday, at which investors are likely to raise the issue.
AIG, one of the world's largest property casualty insurers, said it would address the problem of climate change through "market-based solutions" such as an investment strategy that would combine financial value with reducing greenhouse gases.
It could offer private equity investments to technologies that cut greenhouse gas, it said, and put money into forestry assets and projects that trade renewable carbon credits.
Insurers have every reason to reduce greenhouse gases, Ceres said. A 2005 study by the environmental group showed a 15-fold increase in insured losses from catastrophic weather events in the last three years.
AIG had US$2.1 billion in insured losses from hurricanes in 2005, and 2006 is expected by hurricane forecasters to be another destructive season.