Monday, May 19, 2014

Farmers Insurance Sues Local Governments For Ignoring Climate Change

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BY ARI PHILLIPS MAY 19, 2014

Last month, Farmers Insurance Co. filed nine class-action lawsuits arguing that local governments in the Chicago area are aware that climate change is leading to heavier rainfall but are failing to prepare accordingly. The suits allege that the localities did not do enough to prepare sewers and stormwater drains in the area during a two-day downpour last April. In what could foreshadow a legal reckoning of who is liable for the costs of climate change, the class actions against nearly 200 Chicago-area communities look to place responsibility on municipalities, perhaps spurring them to take a more forward-looking approach in designing and engineering for a future made different by climate change.

“Farmers is asking to be reimbursed for the claims it paid to homeowners who sometimes saw geysers of sewage ruin basement walls, floors and furniture,” reported E&E News. “The company says it also paid policyholders for lost income, the cost of evacuations and other damages related to declining property values.”

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Insurance companies are becoming increasingly concerned, and more vocal, about the rising costs of climate change. With large fossil fuel companies reluctant to take greenhouse gas mitigation efforts in the face of potential profit losses, the behemoth insurance industry could provide a counterbalance to the energy industry when it comes to incentivizing near-term emissions cuts, or at least adaptation to the effects of climate change.

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In another sign that the insurance industry may be ready to galvanize action, Lloyd’s of London, the world’s oldest and biggest insurance market, recently called on insurers to incorporate climate change into their models.

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