Zurich Insurance Group is closing its U.S. climate change office six years after opening it to help persuade companies to press public officials for solutions to climbing disaster losses, according to several sources.
The move seems likely to end a high-profile advocacy effort that exposed federal lawmakers to the financial concerns of a major insurer regarding rising temperatures. Some observers also say the closure stands to lessen an industry voice that might resonate with Republicans in a debate that's often characterized as driven by Democratic ideology.
Zurich's decision comes amid a flush of visibility for the office and its director, Lindene Patton, who in recent months helped write the National Climate Assessment, testified before a Senate panel and spoke at the White House.
In some circles, that has distinguished Patton as an unusually credible advocate for climate action who speaks from the suit-and-trouser world of the financial sector, where crunching numbers outpaces environmental ideology. One observer described her as a "dynamo."
But behind the forceful public presence is a choppier business environment for Zurich, sources say. Patton and her small team of employees were also tasked with creating new types of insurance policies that would be used by climate-concerned customers, ranging from hybrid car owners to utilities that store carbon dioxide underground. Zurich may have seen those products as not popular enough to justify a standalone climate office, some observers say. The products will instead be folded into the company's traditional lines of business.
The move has gained greater attention for its potential reverberations on climate policy. While many observers believe that the insurance industry could help depoliticize the climate debate, there's little evidence it's willing to do that. And it appears there may be less now.
Some observers described Zurich as perhaps the only company that had both a household brand in the United States and a willingness to talk openly about the risks of climate change. (Farmers Insurance Co. is a subsidiary.) That has placed Zurich at the top among insurers who portray rising temperatures as a business threat that could harm the economy, as opposed to an environmental, and often partisan, peril, advocates say.
When Zurich announced its "climate initiative" six years ago, it was an effort, in part, to rally other members of the massive industry to get involved in shaping public policy. It warned of worsening climate risks that foretold of more than just sharpening damage from floods and storms: The industry also faces increased pressure from regulators and, in the eyes of customers, reputational risk if it doesn't act, the company said.
In a white paper from that period, it noted that only "a fraction" of insurers were taking the threat seriously, adding that the industry is "still a long way from meeting the enormity of the challenge."
'Less visible' on climate, but still active
Now, after failing to persuade other insurers to join it in crafting public policy, Zurich appears to be shifting strategy in a political atmosphere that has gotten more divisive on climate issues, not less.
"The internal meaning could be that they don't want to stick their neck out, that they want to be less visible with regard to climate change in general," said Walter Stahel, director of risk management research at the Geneva Association, a Swiss think tank funded by the insurance industry. "And they want to break it down into much more concrete [efforts] to impose adaptation measures."
Zurich might be stepping back from its public policy role because lawmakers hadn't responded to its efforts, Stahel said. He said it's "a pity" that the dialogue between Zurich and lawmakers could slacken, but he noted that the company could be testing other strategies to force changes.
That might have been revealed in a lawsuit filed by Farmers this spring that sought to make Chicago and dozens of other municipalities update their flood infrastructure to reduce growing damages from heavier rainfall. Farmers later withdrew the lawsuit.
"I think insurers would have a number of other hammers to hit the nail" on climate change, Stahel said.
A Zurich spokeswoman confirmed yesterday that the climate office is being closed. But she strongly rebutted assertions by industry observers that it represents a de-emphasis on climate change. She pointed to increased investments and bolstered research efforts that are meant to address warming.
The company, for example, recently launched an effort to measure the value of flood protection measures like sea walls, elevating homes and absorbent surfaces. The $30 million program is meant to make it easier for communities to justify upfront costs for resiliency, leading to less damage.
Zurich also announced last year that it would invest $1 billion in green bonds issued by the World Bank and other institutions for clean power and other projects that are specifically tailored to address climate change.
"Zurich's commitment to addressing climate resilience and extreme weather has not changed," Zurich spokeswoman Jennifer Schneider said in a statement. "We have integrated the knowledge and expertise generated through this [climate] office into every aspect of our business. We will continue to work passionately to help our customers and communities understand and protect themselves from risks and become more resilient and sustainable to natural disasters and extreme weather."
Have insurers 'lost interest'?
Others say the announcement falls heaviest on public policy, not on climate-related research. The industry generally has handled the complex issue of climate change cautiously, they say, refraining from becoming heavily involved in risky legislative tussles.
"Wow, what a loss," said Andrew Logan, who follows the industry for Ceres, a group of investors that's pushing for action on climate change.
"We've lost a major voice who consistently brought insurer perspectives to the climate debate," he added, referring to Zurich's Patton. "So with them gone we end up with an industry that is surprisingly mute given the scale of economic risk that they face."
Zurich's climate office will be shuttered Monday, less than a week after a top Zurich executive attended a meeting at the White House about climate change with nine other industry officials. The closing also intersects with a flurry of publicity over the bipartisan "Risky Business" report, which predicts that coastal damage in the United States could rise by $7 billion annually from sea-level rise and hurricanes over the next 15 years.
Still, as some observers see a retreat by Zurich, others see a shifting strategy that embeds research and product development in the guts of the company, rather than being held in a stand-alone climate office.
"I don't think the company is de-emphasizing climate," said one industry official who supports climate action.
Others struggle to see how the company could achieve the same public profile on climate after it closes the office and releases Patton, who holds lofty appointments with the World Economic Forum, National Academy of Sciences and National Climate Assessment and Development Advisory Committee.
When Zurich unveiled its climate initiative six years ago, it also formed a Climate Change Advisory Council to give the company new ideas about how to prepare for the impacts of warming on its business. The council's co-chairman, Ernst von Weizsäcker, lauded Zurich at the time as a company others would emulate.
Now Weizsäcker, a former college dean and German lawmaker, expressed disappointment -- and a little concern -- with the insurer's new direction.
"I deeply regret that Zurich like several other global companies have lost interest in the issue of climate change," Weizsäcker said. "I pray that [the] effects of global warming will not lead to more dramatic disruptions of farmland and coastal areas, falling back on the feet of insurance companies."
Like what you see?
We thought you might.
Request a trial now.