A section of a car can be seen in a gaping sinkhole that opened up a residential street on Chicago’s South Side after a cast iron water main dating back to 1915 broke during a massive rain storm Thursday, April 18, 2013, in Chicago. CREDIT: AP/ M. Spencer Green 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.” Andrew Logan, an insurance expert with Ceres, told E&E News that there is likely a longer-term agenda in mind with this latest effort, and that the company “could be positioning itself to avoid future losses nationwide from claims linked to floods, sea-level rise and even lawsuits against its corporate policyholders that emit greenhouse gases.” While these suits are the first of their kind, Micahel Gerrard, director of the Center for Climate Change Law at Columbia Law School in New York, told Reuters that there will be more cases like them attempting to address how city and local governments should manage budgets to prepare for natural disasters that have been intensified by climate change. “No one is expected to plan for the 500-year storm, but if horrible events are happening with increasing frequency, that may shift the duties,” he said. 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. “Most insurers, including the reinsurance companies that bear much of the ultimate risk in the industry, have little time for the arguments heard in some right-wing circles that climate change isn’t happening, and are quite comfortable with the scientific consensus that burning fossil fuels is the main culprit of global warming,” reported the New York Times. However this acceptance of the scientific consensus is yet to infiltrate the industry’s actions at large. A recent Ceres survey found that only 23 of the 184 insurance companies plan to have a comprehensive strategy to deal with climate change. “Every segment of the insurance industry faces climate risks, yet the industry’s response has been highly uneven,” said Ceres president Mindy Lubber, in a statement with the report. “The implications of this are profound because the insurance sector is a key driver of the economy. If climate change undermines the future availability of insurance products and risk management services in major markets throughout the U.S., it threatens the economy and taxpayers as well.” Last year a study for the Federal Emergency Management Agency found that sea level rise is projected to increase coastal flood-hazard areas in the U.S. by 55 percent by 2100. If adaptation measures are not implemented, the study projects that the number of coastal flood-insurance policies will increase by 130 percent over the same time period. While flood insurance is overseen by the controversial National Flood Insurance Program, this is an example of the increased role of insurers in the face of climate change as well as the increased burden on insurance companies and taxpayers to cover the costs. 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. “Insurers have an important role to play in mitigating the impact of the changes in climate which have already occurred, through closer coordination with other industries, notably construction,” wrote John Nelson, chairman of Lloyd’s of London, in an op-ed for The Guardian. “There need to be policies to drive up standards and make sure we have resilient homes, that we use better materials. All these and strong forward planning will be key to this effort. Here, too, governments must play their role in enshrining standards in legislation.” According to the Munich Re insurance group, global weather-related losses and damage have risen from an annual average of about $50 billion in the 1980s to close to $200 billion over the last decade. While climate change models try to anticipate changes decades in advance, insurance industries are responsible for selling policies one year at a time. A report last year from the Geneva Association, an insurance industry research group, encourages companies to use forward-looking models when addressing areas impacted by climate change, rather than the more traditional historical precedent. “In the non-stationary environment traditional approaches, which are solely based on analyzing historical data, increasingly fail to estimate today’s hazard probabilities. A paradigm shift from historic to predictive risk assessment methods is necessary,” reads the report. 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