  Climate change is widely expected to increase weather related damage and the
insurance claims that result from it. This will increase insurance premiums, in
a way that is independent of a customer's contribution to the causes of climate
change. Insurance provides a financial mechanism that mitigates some of the
consequences of climate change, allowing damage from increasingly frequent
events to be repaired. We observe that the insurance industry could reclaim any
increase in claims due to climate change, by increasing the insurance premiums
on energy producers for example, without needing government intervention or a
new tax. We argue that this insurance-led levy must acknowledge both present
carbon emissions and a modern industry's carbon inheritance, that is, to
recognise that fossil-fuel driven industrial growth has provided the
innovations and conditions needed for modern civilisation to exist and develop.
A tax or levy on energy production is one mechanism that would recognise carbon
inheritance through the increased (energy) costs for manufacturing and using
modern technology, and can also provide an incentive to minimise carbon
emissions, through higher costs for the most polluting industries. The
necessary increases in insurance premiums would initially be small, and will
require an event attribution (EA) methodology to determine their size. We
propose that the levies can be phased in as the science of event attribution
becomes sufficiently robust for each claim type, to ultimately provide a global
insurance-led response to climate change.
