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“The insurance industry should continue to institutionalize climate change as a core business issue…’’

Aug 29, 2019

Walter Murphy (WM) is a courageous man determined to follow his calling. The pull of Climate Change & ESG made him recently give up a very promising and successful career in the insurance industry. His solid insights into what will and will not work in the Climate Change agenda come from his first hand understanding of the levers of US politics. As a young man he worked at the Capitol Hill for both – the House of Representatives and the Senate. Here he unravels the wheels within wheels of the American Climate Change dynamics, as it unfolds.

PG: Jay Inslee truly set the tone for fixing the Climate Crisis but regrettably decided to stay out of the Presidential race. Thankfully, he will contest for another term as the Governor of Washington. Do you see this as a set back to the Climate Change movement?

WM: I don’t see it as a set back at all.  Rather, I believe that Governor Inslee’s mere presence in this campaign pushed the climate change agenda to the forefront sooner than it eventually would have.  Some would say the governor’s decision to run entirely on the platform of climate change was quixotic, but I find it fascinating and heartwarming that after his recent decision to drop out of the race, the recognition and plaudits he received from all of the remaining Democratic candidates and from many of his peers such as former Secretary of State John Kerry is a testament to the man and the convictions he has stood for all of his political life. 

Governor Inslee was, I believe, the first candidate to release detailed and extensive proposals on what he felt the country needed to actively be doing to stem the ravages of climate change and to reduce this country’s carbon emissions of which the United States has been a major contributor since the early 20th century.  All of the Democratic candidates have since introduced their own proposals on how they propose to tackle climate change, almost one upping each other in the process in a climate change arms race, culminating with Senator Sanders’ $16 trillion proposal to fight climate change.   Governor Inslee moved the needle on this. Suffice it to say that any future candidate, regardless of whether they are Democrat, Republican or independent, running for national or statewide office will have to include a climate change plank in their platform.  I believe it will become the norm and not the exception.

Governor Inslee’s moment in the 2020 presidential campaign may have been ephemeral but it was impressionable.  He should be proud of his contribution.

PG: Do you see the Green New Deal as a bipartisan proposition? Does it enjoy much following in the US? Does it mean there is hope if only Democrats were to come in power?

WM: I believe any momentum in implementing any of the proposals outlined in the Green New Deal or for that matter any proposed climate change legislation will advance and succeed long term only if there is some bipartisan consensus in Congress.  The American people’s regard and attitude towards the effectiveness of the United States Congress and its ability to compromise and evolve meaningful legislation is at a nadir.  It will take a significant amount of work and consensus building for any proposals of the Green New Deal to achieve bipartisan support, but I am somewhat optimistic that it can be done.

First of all, the Green New Deal resolution as proposed by Rep. Alexandria Ocasio-Cortez (D-NY) and Senator Edward Markey (D-MA) is a fourteen-page resolution which calls for a “ten year national mobilization” to address climate change and economic inequality.  Both Democrats and Republicans critiqued the Deal when it was announced, and it is highly unlikely that all of the proposals and initiatives laid out in the resolution has any chance of passing as a whole.  However, I think that incremental changes can be made and that there could be enough support building amongst the ranks of Republicans that some of the proposals outlined in the Deal could come to fruition at some point. 

Although there remain some Republicans who outright reject the existence of climate change and many who continue to deny the basic science presented to them, there are those who not only have accepted that climate change exists but that is anthropogenic in nature.  These Republicans realize the future costs involved in not addressing the climate crisis and are more receptive to finding solutions now than they were ten years ago. 

The other factor I believe will generate more support amongst Republicans is that the constituencies that traditionally support the GOP more and more are pushing its rank and file to further address the economic ramifications that not addressing climate change will have if left ignored.  Climate change has permeated the board rooms of all the major corporations.  Shareholders and customers are demanding more environmental, social and governance from the companies they do business with and whose money they entrust to invest.  The financial sector recognizes the global implications that climate change is having on the bottom line and is requesting Congress to a greater extent to be more proactive in finding solutions at the federal and state levels. 

There long has been an adage that Americans vote with their pocketbook. This is what I believe will drive the narrative going forward and will force both parties to act on significant legislation…

Climate change always has been a “green” issue in terms of the effects it has on our planet’s ecosystems.  Ironically, the reason why we eventually will tackle this conundrum at the scale that is needed is due to another “green” issue – money and economics.  There long has been an adage that Americans vote with their pocketbook.  This is what I believe will drive the narrative going forward and will force both parties to act on significant legislation – whether that is increasing funding for research and development, eliminating subsidies to the fossil fuel industry or expanding electric vehicle charging infrastructure.

I also would like to present one more factor that I deem necessary in order for any Green New Deal climate change legislation to advance on a bipartisan level.  Since Americans do have this cynical and mistrusting attitude toward their federal government, I think it is imperative how our legislators present any climate change legislation to the public realm.  How legislators spin the climate change debate is as important as what ultimately ends up in any bill that addresses climate change. 

The word “spin” is used a lot in Washington mostly with negative connotation.  But I think climate change needs to be put forth as an opportunity to make positive change in our world.  So much of the narrative when it comes to climate change is so pessimistic, so doom and gloom and rightfully so.  Negative sells in the media and climate change is no different.  By accentuating the positives that can be gained by fighting climate change, I believe the more the American people will be receptive to the ideas and proposals put forth by any legislator regardless if they are Democrat or Republican.  There is a burgeoning offshore wind industry on the precipice of taking off in this country. 

By spinning the benefits of what this industry would bring in terms of economics (the other “green”) – thousands of long term, sustainable new jobs, lower electricity rates, cleaner air which leads to lower healthcare rates – I think Americans would get behind legislation faster than telling them how much carbon dioxide emissions are bad for you and that this MUST be done to meet the standards set in an international treaty many know nothing about.  Keeping climate change tonally positive will resonate more and hopefully persuade the American people to push its legislators to work together in the spirit of bipartisanship to enact meaningful climate change legislation.

PG: California has been historically well ahead of all states when it comes to environment. What is it that California is doing to make insurance less dysfunctional if not fully functional while actively promoting sustainability? Does the California Insurance Commissioner have an action plan in sync with the state policies?

WM: There’s a saying that “everything is bigger in Texas”.  While that still may hold true, it may one day be amended to say, “everything is bigger in Texas – until you move to California”.

The economy of California is the largest in the United States, boasting a $3.018 trillion gross state product as of 2018. As a sovereign nation (2018), California would rank as the world’s fifth largest economy, ahead of the United Kingdom but behind Germany. The state is almost 164,000 square miles with diverse physical topography such as its 840 miles of coastline, to the snowcapped Sierra Nevada Mountains running through her central spine, to the economic bounty of its Imperial Valley and all the way down to the semi-arid steppe climate of southern California.  As of 2018, 39.56 million people called the Golden State their home, making it the most populous state in the union and the state with the most electoral votes (55) in the electoral college.  All of this makes California the “Big Enchilada”.

Because of California’s sheer size and diversity, California insurers have diverse underwriting vulnerabilities to climate change.

While summer wildfires have dominated the attention, the state also has had to deal with severe drought.  One-third of California’s water supply comes from the melting snowpack of the Sierra Nevada Mountains.  Meteorologists and hydrologists already are seeing fluctuating weather patterns that will adversely affect the snow levels in the future.  Long term drought also has affected the state’s aquifers due to over pumping for agricultural purposes.

California Insurance Commissioner Ricardo Lara has teamed up with the United Nations to develop “sustainable insurance” guidelines that would help address climate-change-related disasters such as coastal flooding and larger wildfires – the first such partnership of its kind between the international organization and a U.S. state. 

“We have a historic opportunity to utilize insurance markets to protect Californians from the threat of climate change, including rising sea levels, extreme heat and wildfires,” Lara said in a statement. “Working with the United Nations, we can keep California at the forefront of reducing risks while promoting sustainable investments.”

Commissioner Lara recently has appointed the nation’s first Deputy Insurance Commissioner of Climate and Sustainability in the United States.  The Department’s new Climate and Sustainability Office will address the threat of climate change by working with the insurance industry, climate experts, California and international leaders. Commissioner Lara also is currently the vice-chair of the NAIC’s Climate Change and Global Warming Working Group. This Working Group reviews climate change risk to insurance companies, receives information regarding the use of modeling by carriers and their reinsurers concerning climate change and its impact on insurers through presentations by various experts and interested parties. The Working Group also investigates sustainability issues and solutions related to the insurance industry, and reviews innovative solutions, including new insurance products.

For more information on what the California Department of Insurance is doing to manage the risks associated with climate change, check out this comprehensive report as provided by the Department.

PG: Likewise, are you seeing any positive action flowing into the insurance policies at the Washington state thanks to the urgency and gravity of Mr. Inslee’s vision for addressing Climate Crisis?

WM: Washington Insurance Commissioner Michael Kreidler definitely has been a leader when it comes to addressing the threat of climate change to the insurance industry and the consumers that he is trying to protect. The commissioner chairs the National Association of Insurance Commissioners’ (NAIC) Climate Risk and Resilience Working Group ( The group’s goals include:

  • Engaging with industry and stakeholders in the U.S. and abroad on climate related risk and resiliency issues;
  • Investigate and recommend measures to reduce risks of climate change related to catastrophic events; and
  • Identify insurance and other financial mechanisms to protect infrastructure and reduce exposure to the public.

Governor Inslee, Commissioner Kreidler and Washington Commissioner of Public Lands Hilary Franz recently authored an op-ed in The Seattle Times extolling the threats that climate change poses to the state’s communities.  This kind of synergy is welcomed and needed in the uphill battle we face against climate change.  Changing weather patterns and drier summers in California and the Pacific Northwest will continue to result in more prevalent and intense wildfires.  As wildfires get worse, Insurers are quietly reducing their exposure to fire-prone regions across the Western United States, putting new pressure on homeowners and raising concerns that climate change could eventually make insurance unaffordable in some areas.

PG: What in your view ought to be the fundamental shift in the way insurance products and processes are designed so as to facilitate the decarbonization process?

WM: The insurance industry as a whole needs to do a better job coordinating with stakeholders such as regulators, governments and insurance standard setting organizations as how best to broaden their initiatives in mitigating the effects of climate change and increasing their investment in climate change infrastructure.  According to Lloyd’s of London, damages from weather-related losses around the world have increased from an annual average of $50 billion in the 1980s to close to $200 billion in the past 10 years. At this rate, the economic costs to the industry will severely hamper its ability to invest in assets as would have in the past.  Pro-action rather than reaction on the part of the industry is imperative for its future survival.

The insurance industry should continue to institutionalize climate change as a core business issue, expand its contributions towards building financial resilience to climate risks and supporting the transition to a low-carbon economy by collaborating with governments and other key stakeholders. Governments and the insurance industry should explore ways to support climate resilient and decarbonized critical infrastructure through the industry’s risk management, underwriting and investment functions. The industry needs to continue supporting the transition to a low-carbon economy through its underwriting business, investment strategies and active reduction of its carbon footprint.  

PG: From your time at the Hill, is there any learning addressing Climate Change may have from Healthcare (Clinton/ Obama initiatives)?

WM: I think one of the key elements in passing successful climate change legislation will be who are the particular members of Congress driving the legislation and leading the efforts to include all factions in the debate.  For me, the message bearer will be just as important as to what eventually is included in any legislation. 

The decision to appoint First Lady Hilary Clinton as the point person on reforming Healthcare in 1994 had great ramifications and ended up being one of the biggest obstacles to passing any meaningful legislation.  Even though Democrats controlled both houses of Congress, Mrs. Clinton was such a lightning rod for the opposition, even back then, that many Republicans bristled to work across the aisle to pass any tangible legislation resulting in a failed attempt to reform Healthcare and, in a sense, helped to spur on the Newt Gingrich led Republican Revolution which led to the Republican takeover of the House of Representatives and Senate in the 1994 midterm election.

Conversely, when I was working on The Hill in the late 1990’s, Congress was able to pass the Bipartisan Campaign Reform Act.  The effort was spurred by the alliance of Senator John McCain (R-AZ) and Senator Russ Feingold (D-WI) – two respected members of the Senate who had a reputation and history of building coalitions.  Their cachet as being more moderate members of their respective parties and their ability to compromise and work well with most members of the Senate ultimately resulted in passage of a campaign finance bill.  It was not a perfect bill, but it did make significant changes to campaign finance laws. 

Therefore, whoever is “driving the train” will be an integral component if any meaningful climate change legislation is going to make it through the legislative sausage grinder that is the United States Congress.  If the charge is being made by someone such as Rep. Alexandria Ocasio-Cortez (D-NY) and Senator Bernie Sanders (D-VT), I really don’t see significant progress being made.  Any meaningful legislation will need the leadership of moderates in both parties joining together to have any chance of producing significant climate change action.

The other issue I see is that there are many activists out there who want to see radical and sweeping climate change to battle the mounting threat of climate disruption.  Senator Sanders, in fact, is calling for a “revolution” against climate change.  Unfortunately, passing “revolutions” in Congress at any time in our nation’s history is not the norm, especially during this era of bitter and rancorous partisanship.  Seismic change is not going to happen at the scale that we really need to happen in order to meet the threshold levels laid out in the Paris Agreement.  Any gargantuan legislative proposal is going to turn members off, as they will think it impossible to navigate through both chambers of Congress. 

Although many climate change activists might not be willing to accept tackling climate change via smaller increments, I believe it’s the only way to make any headway at all.  Small victories will lead to more victories.  Stringing together victories would build confidence and possibly snowball into larger proposals and greater attempts to make effective change.

PG: Is the average American serious about Climate Change? Does he/ she believe in the virtues of the Paris Agreement?

WM: In a recent Washington Post-ABC News Poll, 62% of Americans disapproved of the Trump administration’s handling of climate change compared to only 29% who approved. Year after year, Americans not only have become more accepting that climate change is a real threat to their existence and way of life, but the issue slowly has risen to become one of the top political issues of the 2020 presidential campaign. 

As has the rest of the world, the United States increasingly is seeing more adverse weather conditions than ever before.  From flooding in the Midwest, to oppressive heat waves in the Northeast, to longer and more intense hurricane seasons in the South, to epic wildfires in the West, Mother Nature has gotten American’s attention.  There certainly are those who still debate and, in some cases, totally dismiss the science put forth in defense of climate change.  But those numbers are diminishing year after year. 

The more people are faced with a natural disaster event, the more people will call for action.  Whether they believe in the virtues of the Paris Agreement is difficult to say.

The more people are faced with a natural disaster event, the more people will call for action.  Whether they believe in the virtues of the Paris Agreement is difficult to say.  The Paris Agreement was not legally binding, and countries are on their honor to adhere to the proposals to reduce the greenhouse gas emissions.  President Trump’s decision to withdraw from the Agreement, I believe, galvanized many governors, mayors and state officials to carry on the efforts outlined in the Agreement.  Most of the climate change action in the United States is being driven at this level. 

I think what is more important is how Americans feel climate change is affecting them economically and their quality of life rather than whether they support the Paris Agreement.  Support for renewable energy and a reduction of carbon emissions, in my opinion, only is going to increase and will continue to remain one of the top issues in the political arena for decades to come.

PG: Many thanks, Walter! May your passion and drive bring about the desired change to make our Planet truly sustainable.

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  1. NAVTEJ SARNA permalink

    A brilliant interview that puts Climate Change in a practical perspective in terms of the workings of the American political system. There are several ideas of interest – climate change as an economic issue, climate change as a public policy issue and climate change as a factor in how the insurance industry evolves, making it a factor for proactive policy rather than a reaction to a crisis. These ideas need to be discussed and fleshed out. Thank you

    • Aye aye, Chief! Shall continue working on these fronts. Just finished a paper with coauthors from a Swiss Institute. Will share. Warm regards..

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