The Handmaiden’s Woes: Stranded Assets!

“Insurance is a handmaiden of the Industry” was almost a gospel truth when I started in the trade. From an initial sense of detest to try positioning insurance into the mainstream consciousness has been a personal exploration. Perhaps assuming an activist role by refusing to be the doormat is a recurring one. With the arrival of ‘Stranded Assets’ into insurance lexicon the luxury of biding any more time seems to have passed us by. Climate change if I may say is the cause of the handmaiden’s woes resulting into asset stranding. It is important that we recognize the how and why of the brownie points we have been gathering through our journey. Also, how the governance of our economics and politics is converging globally into the troika of ESG? Whether or not we take that seriously, we have already set a ticking time bomb for the human race.

Diminishing carrying capacity

Let’s indulge in some diagnostics ailing the handmaiden.

At the heart of it all is the crying need to bring a balance between Anthropocentrism and Ecocentrism. The individual, cultural, and technological skills of humans are among the attributes that make Homo sapiens, special and different. However, the true measure of evolutionary success, in contrast to temporary empowerment and intensity of resource exploitation, is related to the length of time that a species remains powerful—the sustainability of its enterprise. There are clear signals that the intense exploitation of the environment by humans is causing widespread ecological degradation and a diminished carrying capacity to sustain people, numerous other species, and many types of natural ecosystems. If this environmental deterioration proves to truly be important, and there are many indications that it will, then the recent centuries of unparalleled success of the human species will turn out to be a short-term phenomenon, and will not represent evolutionary success. This will be a clear demonstration of the fact that humans have always, and will always, require access to a continued flow of ecological goods and services to sustain themselves and their societies. (http://science.jrank.org).

Notwithstanding the protection gap, whatever the form, shape and size, if insurance were to continue partnering with an anthropocentric urge it will always run counter to ecocentrism. How does this manifest and get an iron grip over the march of human history? Author Amitav Ghosh’s The Great Derangement is a classic insight into this aspect. A must read for every thinking risk manager. My ancestors were ecological refugees long before the term was invented, says he. Here are some of his nuggets:

1. That climate change casts a much smaller shadow within the landscape of literary fiction than it does even in the public arena is not hard to establish. And if the urgency of a subject were indeed a criterion of its seriousness, then, considering what climate change actually portends for the future of the earth, it should surely follow that this would be the principal preoccupation of writers the world over – and this, I think, is very far from being the case.
2. The reality is that ‘growth’ in many coastal cities around the world now depends on ensuring that a blind eye is turned towards risk.
3. It was in exactly the period in which human activity was changing the earth’s atmosphere that literary imagination became radically centred on the human. Inasmuch as the non-human was written about at all, it was not within the mansion of serious fiction but rather in the outhouses to which science fiction and fantasy had been banished.
4. Similarly, at exactly the time when it has become clear that global warming is in every sense a collective predicament, humanity finds itself in the thrall of a dominant culture in which the idea of the collective has been exiled from politics, economics and literature alike.
5. For the body politic, this vision of politics as moral journey has also had the consequence of creating an ever growing divergence between a public sphere of political performance and the realm of actual governance: the latter is now controlled by largely invisible establishments that are guided by imperatives of their own. He alludes to the deep state.
6. Man’s dominion over Nature: The idea of infinite or unlimited growth, which proves so attractive to economists, financiers and experts in technology.
7. In the text of the Paris Agreement, by contrast, there is not the slightest acknowledgement that something has gone wrong with our dominant paradigms; it contains no clause or article that could be interpreted as a critique of the practices that are known to have created the situation that the Agreement seeks to address. The current paradigm of perpetual growth is enshrined at the core of the text.
8. The Agreement’s rhetoric serves to clarify much that it leaves unsaid: namely, that its intention, and the essence of what it has achieved, is to create yet another neo-liberal frontier where corporations, entrepreneurs and public officials will be able to join forces in enriching each other.

The see saw battle continues

Ten plus years ago California Attorney General Bill Lockyer filed a lawsuit against leading U.S. and Japanese auto manufacturers, alleging their vehicles’ emissions contributed significantly to global warming, harmed the resources, infrastructure and environmental health of California, and cost the state millions of dollars to address current and future effects.

This push eventually resulted in 2012 regulations that aimed at reducing the country’s oil consumption by 12 billion barrels and eliminate six billion metric tons of carbon dioxide pollution over the lifetime of the cars affected. That amounts to more than a year’s worth of America’s carbon emissions. The standards would require automakers to nearly double the average fuel economy of new cars and trucks by 2025, to 54.5 miles per gallon, forcing automakers to speed development of highly fuel-efficient vehicles, including hybrid and electric cars. The new federal government intends to lower that target.

Environmentalists and public health experts have criticized the automakers’ resistance to emissions rules under the current administration as an about-face. Bonnie Holmes-Gen of the American Lung Association of California, one of many health and environmental groups has reportedly said moving away from strict emissions standards would hurt public health and the health of the planet.

Ever since then Toyota got to the global pole position to be dethroned by Volkswagen which in turn is in the eye of a-scandal-of-a-storm. Indeed the driverless cars are in sight. In the meantime, China has become the world’s largest auto market. Together with India these are the two largest gas guzzlers. The carbon economy continues to dominate our times and Asia is surging ahead.

With this new centre-stage now under thick smog, Ghosh observes:

Asia is conceptually critical to every aspect of global warming: its causes, its philosophical and historical implications, and to the possibility of a global response to it. It takes only a moment’s thought for this to be obvious. Yet, strangely, the implications are rarely reckoned with – and this may be because the discourse on global warming remains largely Eurocentric.

The brute fact is that no strategy can work globally unless it works in Asia and is adopted by large number of Asians. Yet, in this matter too, the conditions that are peculiar to mainland Asia are often absent from the discussion.

In conclusion

Twenty plus years ago I dreamt the insuring community would soon pick the courage of donning some form of activism. Saying no to insure whatever puts the planet at risk. Ten plus years ago one strong ray of hope emerged from California (please see Special Feature – The Greenhouse Effect). Suddenly there is a sense of abdication looming large. Do we wish to be bystanders? Is there nothing that we can do? Amitav Ghosh cites Pope Francis’s critique of the era that he describes as ‘a period of irrational confidence in progress and human abilities’. If the handmaiden were to continue betting in favour of anthropocentrism its cup of woes will never be empty. Will there be a Noah’s Ark for our rescue yet again or would humanity get a real second chance as in The Hitchhiker’s Guide to the Galaxy?…