While the focus for years has been on autonomous cars and on what they'll do for safety, for auto insurance, for our lifestyles and more, a disruption is taking shape in the nearer term: autonomous trucks.

The fear factor has obscured that vision. While it is odd enough to drive down a street in Phoenix and see a Waymo minivan next to you without a driver, it's hard to imagine anyone setting loose on a highway an 18-wheeler carrying 50,000 pounds without anyone at the wheel.

But we're close.

If you can get the image of a hulking semi out of your mind, highway driving makes perfect sense. The issues that have slowed deployment of autonomous cars all relate to the vagaries of us humans. The technical problems related to snow, rain, fog, etc. have all been solved. But is that driver going to shove his way into the intersection even though he doesn't have the right of way, or will he wait for the AV? What about that pedestrian walking against traffic? That bicyclist who seems confused? Does the ball that rolled into the street mean a little kid is about to follow it from behind the double-parked van? But highway driving takes away a huge number of the human variables -- no pedestrians, no cyclists, far less merging with other vehicles.

Autonomous trucks can basically just get on a freeway and go straight until they need to get off. They solve a real problem, too. By law, truck drivers can only drive 11 out of every 24 hours. That means trucks, with valuable cargo, sit 13 out of every 24 hours. It also means that trucking companies are always short of drivers. But autonomous trucks would be able to go 24/7, cutting many trips in half and making trucking much more efficient.

The change would have broad implications, including for insurers that cover truck fleets and their cargo and for those that cover workers -- some driver jobs would disappear, while others would morph to handle changes in loading and unloading, refueling and more. For instance, some drivers might become specialists in the "first mile" or "last mile," taking an autonomous rig through complex city traffic out to the freeway or picking a rig up on the freeway and navigating it to its final destination, much as captains who know a harbor have long done with ocean-going cargo ships.

Change won't happen overnight. Trucks still have to overcome that first-mile/last-mile problem -- a high-profile startup shut down last year after trying to have drivers use virtual reality to take control of trucks whenever necessary. Autonomous trucks will also be more complicated mechanically than cars for the foreseeable future. While autonomous cars will all be fully electric, the batteries necessary to run trucks are so heavy that they cut into mileage too greatly, so autonomous trucks will not only need to have enough battery power to run all the sensors and computers but will still require an internal combustion engine.

Still, workarounds are developing, and autonomous trucks are making great progress. For instance, Locomation offers what it calls autonomous relay convoys, which combine two human drivers and two autonomous vehicles. Each human drives a rig to the freeway, where one then takes charge of driving. The other's rig switches to autonomous mode and follows the lead rig, while the human in the trailing vehicle rests. When the first driver's 11 hours are up, the rested driver takes over. Whenever the trucks need to split up to go their individual destinations, the respective drivers simply take control.

These sorts of convoys would barely make a dent in the potential of autonomous vehicles, but they do solve a real problem, and they provide a start for the long adoption curve ahead of us.

While the idea of having 50,000 pounds barreling down the freeway without a human at the wheel may still be intimidating, think of it this way: Truck drivers are up so high up that you rarely notice them, unless they've done something aggressive and you're looking for the driver because he's ticked you off. And AVs are by nature so cautious that you'd almost never try to stare down their driver. So you may not even notice the transition to automated trucks.

Cheers,

Paul

Ask yourself these simple questions: Do I walk/run at least 5 km (3 miles) a day? Do I drive or take public transport everywhere I need to go? Do I drink more water than alcohol when having dinner at a restaurant with friends? At my lunch break, do I take 45 minutes to enjoy a healthy meal or eat fast food?

While some of us may have adopted very healthy lifestyles, many more have not. But what if technology and behavioral science could work together to help all of us live healthier, longer lives? The impact could be transformative. For example, the World Health Organization (WHO) found that the proportion of total global deaths due to chronic lifestyle diseases is expected to increase to 70% of the global burden of disease by 2030, up from 56% in 2015. A basic understanding of behavioral science, combined with advances in wearable and personalized technologies, could begin to make a tangible difference in risk assessment.

There are reasons, rooted in human psychology and behavior, that cause many of us to fail to act as we know we should. Cognitive biases, and the pressures of modern life, can defeat even the best intentions. For example, if you prefer red wine over water at dinner, you may fall into the "present bias" trap, or an aversion to delayed gratification in favor of an immediate reward. In other words, many of us would seize the prospect of a sip of a good cabernet over a less tangible future gain, such as healthier liver function.

Many of us are at pains to set objectives - avoiding an extra serving of cheesecake or sticking to the sparkling water over the pint of beer -- but, despite the best plans, personal trainers and advice of friends, we fall into old habits. Similarly, many of us fail to follow through on New Year's resolutions, a phenomenon behavioral scientists call the "intention-behavioral gap." Often, our "doing-selves" do not follow the intentions of our "planning-selves." We know we should take a real break to have a proper, healthy lunch but still end up ordering a snack.

Is there a way to help people achieve goals set by our "planning-selves?" Can insurers act to help people by designing value propositions that promote healthier behaviors? The answer may lie, in part, in whether carriers can fully grasp human biases and behaviors and harness technologies to use this knowledge to improve health.

Understanding Motivation

First, consider how people make decisions. In his book, "Thinking Fast and Slow," famed behavioral scientist Daniel Kahneman argues that the human brain has two different operating systems: System 1 and System 2. "System 1" is fast, instinctive and emotional. "System 2" is slower, more deliberative and more logical. When we think of human decision making, we often assume that people are rational, calculating decision-makers (System 2) and therefore think that providing people with facts will change behavior.

Reality is a bit more complex. Matthew Battersby, chief behavioral scientist at RGA, often uses smoking as an example: "Lots of money has been spent for many years trying to inform and change the minds of smokers about the dangers and risks associated with the activity," he says. "Many smokers know these risks yet still don't change their behavior, and those who do change aren't necessarily influenced simply by information. Instead, they may have been persuaded to stop smoking by various other factors, such as changes in the environment (e.g., smoke-free workplaces) and motivational aspects (e.g., it's much harder to smoke when lots of your friends are no longer smoking)."

Even when consumers are well-informed about a health danger, some may continue destructive behaviors. Information alone -- or System 2 thinking -- is not enough. System 1 thinking may explain why; many smokers make instinctual, and perhaps irrational, decisions to continue the habit.

Most of us respond to environmental and social cues in a way that requires very little conscious engagement. Health decisions may be rational, but actual health behavior is much less so and more often driven by often unconscious, cognitive processes. Memory is also imperfect, and attention spans are limited, making fully fact-based decision-making even more difficult.

So, rather than bombarding a consumer with wellness data to encourage healthier behaviors, insurers can, instead, influence behavior by using use tools/mechanisms that target human System 1 responses (fast, impulsive), appealing to psychology and not rationality. This can take the form of reinforcement or reminders that focus attention on personal health goals and rewards or even celebratory messages when individuals reach health milestones, such as a certain step count.

See also: Life Insurance With Mortgage Protection

Applying Motivational Techniques

However, understanding human motivation is only half of the story. Success will require a means to reach the right customer, at the right time, with these messages. Wearable technologies offer a compelling means to help more people adopt healthier behavior, but they also present limits.

Why are wearables so promising? Consider the enormous popularity of these portable, data-rich devices. CNN Business reports that the Apple Watch sold 31 million units worldwide, while all Swiss watch brands combined sold 21 million units, according to research from consulting firm Strategy Analytics. Market researchers have found that 81% of wearable device owners feel that they have made an improvement in their overall health/lifestyles by using these devices.

So, the adoption of wearables technologies represents one step forward for the watch trade and one giant leap for the life/health insurance industry, right? Not necessarily. Many consumers appear to tire of these devices, and levels of comfort with health data-sharing can vary.

The COM-B model in behavioral science can help explain why. The model states that human behavior (B) consists of three components: capability (C), opportunity (O) and motivation (M). Capability refers to the belief that we are psychologically and physically able to change or improve a behavior. Opportunity refers to a social or physical opportunity to make a change (or reduce the environmental triggers that spurred negative behavior). Motivation is linked to the desire to carry out a certain behavior over competing behaviors.

Capability (I can cycle) and opportunity (cycling near home is safe) are obvious, but what about motivation? How do insurers get it, and how can insurers provide it?

Mastering Motivation

All of us have faced situations in which we must motivate someone to make a change, whether that person is a child, a coworker or a stranger. We use persuasive techniques that draw on behavioral science, often unknowingly. For example, it is common to promise a reward: Do X thing and receive Y benefit.

For organizations aiming to make us healthier and help us live longer, rewards make sense. But what rewards work? Behavioral science offers clues.

• Frequent feedback: We are more likely to achieve a goal if we receive frequent and qualitative feedback, such as push notifications that congratulate users or explain areas of improvement.
• Scarcity: Options or rewards that are perceived to be scarce can seem more attractive. For example, the idea of a "last chance" to win points can prompt someone using a wellness app to walk an extra 1,500 steps.
• Commitment contracts: We are more likely to achieve goals if we have committed to them, so encouraging customers to commit to goals through contracts leads to greater success.
• Messenger: Our reaction to information and messages depends greatly on the credibility of the messengers. For example, a recommended exercise regimen from a famous gym coach will carry greater weight than a suggested regimen from a friend.
• Salience: Our attention is drawn to what is novel and prominent -- that's why "Walk Now" push notifications in health apps may increase our activity rates.
• Relative ranking: We tend to do better if we can compare our performance with others. Competition yields results.
• Utility: We act in ways that prioritize advantages, minimize losses and maximize perceived value. That's why health programs and apps that allow participants to clearly evaluate value, such as weight loss or health improvement, can drive results.
• Ease: We are more likely to change our behavior if we perceive that change to be easy. Programs that allow for incremental improvement, such as tips on how to walk 150 steps more per day, can yield greater participation.

Looking Forward

Insurance carriers are often perceived to have fewer customer interactions compared with other financial services providers, like banks. However, the ability to engage through wearables could create more active relationships that benefit both the consumer and the insurer.

The popularity of connected devices offers an opportunity to support insurers in offering services that can adapt to consumer behavior and support customers in managing personal risk and improving health. Insurance companies can move from being perceived as simply "providers of policies that protect against risks" to being seen as guardians of health and longevity.

A phrase about fire should read more like an expression about fiery rhetoric, because where there’s smoke inhalation, there’s a cloud of confusion. The smoke comes from vapors of misinformation about an industry in which the good deserve recognition and the compliant warrant respect, in which those who comply with the law uphold the letter of the law, in which those on the right side of the law are true to the spirit of the law. The insurance industry should separate the good, whose ranks include manufacturers of approved vaping products and devices, from the bad. 

Approved products are not an endorsement of vaping, or approval from the government for people to vape for no reason. Rather, approval corresponds to federal standards of safety and disclosure. 

In honoring these standards, consumers have the knowledge to make informed decisions: to choose the right vaping devices for the right reasons. In turn, insurers should distinguish between those who vape in accord with the rules—on account of the rules—versus those who put themselves at risk of injury or hospitalization.

According to Mike Khalil, founder and CEO of JJ Compliance Consulting Group (J&JCC Group):

“Compliance is a necessity for the tobacco and vape industry. And yet those who ignore this fact, or believe they can change the facts, face an unpleasant reality via fines or lawsuits, both. The cost of noncompliance is a cost insurers will not absorb and consumers will not accept. Also, those who do not obey the law forfeit their moral right to object to the enforcement of the law—period.”

Notice the point about the morality of compliance, as this point alone speaks to what insurers should do. The point is to encourage good behavior, not punish it; charging consumers who vape with specific devices, specifically approved devices, less than those who vape with a sense of careless disregard.

If insurers care about this issue, if they care about compliance in general and improving the safety of vaping in particular, they should insist on the wholesale adoption of existing rules by the vaping industry. The effect would cause other industries to follow suit, lowering costs not only for insurers but for everyone.

See also: Pressure to Innovate Shifts Priorities

Compliance is a testament to matters of legal and moral importance. That is to say, compliance is not a DIY (do it yourself) project; it is instead proof of a company’s commitment to what the government demands, regulators require, courts expect, and consumers want.

Compliance is a goal insurers should promote, since the alternative is too dangerous to deny and too wrong to dismiss. 

That this goal is attainable, that it is affordable too, underscores the fact that it is the right thing to do. 

Prioritizing this goal is how insurers can increase safety without raising costs, or losing money. Prioritizing this goal is how the insurance industry can strengthen its reputation, and develop a reputation for oversight, care, and compliance.

With consultation from experts, compliance can be the standard all industries embody.

The rapid rise to fame of special purpose acquisition companies (SPACs) brings with it a host of uncertainty and risks along with the promise of fortune. In the U.S., 274 SPACs were launched in 2020, and so far in 2021 about $100 billion has been raised, according to the Wall Street Journal. Such is the growing appeal of SPACs that the Securities and Exchange Commission took the unusual step in March of warning that it is “never a good idea to invest in a SPAC just because someone famous sponsors or invests in it or says it is a good investment.”

In addition to warning against basing investments solely on celebrity endorsements, the SEC recently issued further guidance on the booming SPAC market, and many believe that increased scrutiny will continue, with further regulation coming. From an insurance perspective, much of the focus has been on the risk exposures of executives and directors involved in the deals, resulting in an explosion of D&O insurance demand. Although many of the risk exposures remain the same as those in traditional M&A deals, lack of historical data has fueled uncertainty over future litigation possibilities. Perhaps the biggest difference in SPAC risk exposure is the speed with which deals must be completed. As with other areas of the mergers and acquisitions market, the use of representations and warranties (R&W) insurance can offer real benefits to both buyers and sellers to help manage these risks.

Managing the risks

The use of R&W insurance has become a standard feature and a valued tool to facilitate deals in the private equity (PE) space over the last several years, with myriad benefits for both sides of the transaction. Participants in SPAC transactions should also consider R&W insurance once a target has been identified and work is underway to complete the de-SPAC merger. 

The risks to be insured on a SPAC transaction are not radically different from a PE deal – for the buyers, the exposures are largely the same.  However, there is one significant difference in SPAC transactions that may drive risky behaviors: deals are being done against the clock. 

One of the key attributes of SPACs is that deals must be completed within a two-year time frame, which imposes considerable pressure on the founders to find the target and close the merger. In a typical PE deal, despite months – sometimes years – of due diligence and the seemingly good intentions of both parties, it’s not uncommon for M&A issues to arise under sales contracts—often after the ink has dried. The aggressive timeline of a SPAC transaction only heightens these risks. Some parties may be tempted to cut corners in the due diligence process and SPAC sponsors are well aware that discovering bad news might derail the deal. 

This time pressure can also mean that SPAC sponsors may make concessions during the negotiation of the purchase agreement, because they have an incentive to close the business combination and don’t have a fiduciary duty to the investors. In most cases, sponsors are able to sell their shares soon after the deal is done, so they are less interested than other investors in the target’s long-term performance. This last issue can, and in some cases has, been resolved by making sponsors hold shares in the SPAC longer so that their interests are more aligned with other investors.  The more interest the sponsor has post-deal, the deeper they may dig to understand the target, and the more invested they may be in the due diligence process.

How R&W can make it happen

In simple terms, R&W insurance hedges risk for both buyer and seller. When evaluating coverage options, working with a team of underwriters experienced in executing deals under tight time constraints can give SPAC acquirers certainty that they will have insurance in place when they sign a deal. 

Equally important is choosing an insurer  that has a deep bench of underwriters with depth and breadth of experience across sectors, as they will be able to highlight any soft spots in the diligence that need to be addressed to ensure meaningful coverage.

See also: Startups Must Look at Compensation Plans

There is also competitive pressure for targets. Having R&W insurance can be an advantage to the targets in an auction process, making them attractive to investors. Should there be any misrepresentations or breaches post-closing, the seller is liable for losses for the period of time set out in the agreement. To cover any legacy liabilities, a portion of the proceeds from the sale are typically held up in escrow, handcuffing sellers from using those funds. When a target has R&W insurance, it removes the requirement to have an escrow and the sellers can realize the entire proceeds of the deal on closing. For a purchase in the hundreds of millions of dollars, the ability to liberate a 10% escrow with an insurance policy is very attractive. 

While the risk profile for a SPAC target is not critically different from that of any other business requiring R&W insurance, the abbreviated timelines involved on SPAC deals and their shorter track record makes it harder to predict outcomes. Just as a celebrity relies on their reputation to secure endorsements, so too must an SPAC sponsor seeking investor and target company trust. R&W insurance serves as an important tool to facilitate these fast acquisitions, transferring risk to the insurance company and keeping reputations intact.

One of the most important business lessons we’re learning throughout this pandemic is that nearly every job carries risk. Medical workers and first responders put their lives on the line. Essential workers report to duty even with high infection rates. Even corporate employees working from home endure increased mental and emotional stress. The result of this tenuous working environment is millions of employees ready to jump ship, and employers at risk of disrupting operational flow, revenue and employee retention.

Remote employees are said to be working three more hours per day and increasing productivity levels. This is happening in addition to other home life responsibilities they are managing. Some employees are experiencing burnout and depression but trying to stick it out, while others are seeking to jump ship. A recent survey shows 52% of employees plan to job hunt this year, up from 35% in 2020. Other Management reveals 46% of employees now feel less connected to their current employer, and 42% say company culture has dwindled during the pandemic.

Ensuring employee safety, which in turn mitigates corporate risk, is quickly becoming a priority for businesses if they want to thrive throughout this turnover tsunami. The Centers for Disease Control and Prevention Foundation reported in 2015 that the average cost of influenza for businesses averaged $87 billion annually. Now add a potentially annual seasonal outbreak of COVID-19 to that number, and you are looking at a very real, very large and very expensive problem.

However, much of what we’re learning about pandemic risk mitigation can be applied indefinitely to ensure healthier, more cost-effective operations, and better overall employee experience and retention. Considering that 50% of respondents to the 2020 HR Sentiment Survey by Future Workplace ranked employee experience as their top initiative, this shows a direct link between emerging workplace technologies, the employee experience, and operational success. If organizations can better shape the employee experience by capitalizing on emerging tech, they will create a pipeline to attract and retain motivated talent, bolster culture, decrease budgetary spending and improve business operations. 

Here are some of the workplace technologies that can help organizations reduce risk during the turnover tsunami:

1. Safety Solutions: Investing in an end-to-end health and safety solution that accounts for virus protection now and provides tools to keep employees safe in the future demonstrates the value your organization places on employee wellness. It’s a way to rebuild connections with existing employees, retain your corporate culture and recruit new talent.

2. Pre-Employment Screenings: Hiring and onboarding quickly and safely during a turnover tsunami is critical to an organization’s success. Partnering with an internationally accredited screening firm ensures new hires are vetted completely before joining the staff. A screening firm will run checks on criminal records and social media use and verify references and credentials. Many businesses are adding COVID-19 testing to their pre-employment screening packages to help reduce health risks. 

See also: 3 Silver Linings From COVID-19

3. Drug Testing: Studies show substance abuse increases dramatically during a national crisis and remains elevated for months afterward. Since the pandemic began, more employers have started using oral fluid (saliva) drug testing. These tests are accurate and easy to use and can be taken from the comfort of an employees’ own home while under constant supervision. Oral fluid drug testing can be collected virtually, using remote video observation, ensuring the validity and integrity of the sample and protecting the safety of the donor and collector from any COVID-19 exposure.

4. Learning Management Systems: Part of a successful employee experience is providing opportunities for growth. An internal learning academy, like one you could build out with an LMS, meets employees where they are. Classes can address employee needs like wellness, upskilling and remote team management. The result is a strong workforce and a subtle way to rebuild your culture. 

5. Artificial Intelligence: AI is imperative in your recruiting process as it facilitates work and transforms behaviors using real data. Screening capabilities allow you to customize questions to attract the right talent. Automated tools can aggregate and score applicants. Chatbots can schedule interviews, answer questions and even deliver videos. 

Employees and job hunters alike are expecting and searching for employers who work to protect their workforce and improve workflow. Technologies to improve the employee experience and protect new hires are more than just incentives to boost confidence and safety. They help organizations position themselves to attract skilled talent and futureproof operational excellence.

From a downpour of tears to a deluge of debt, the loss of a loved one can drown a family in a sea of emotions and a storm of expenses. The loss can flood the last refuge of sanctity and shelter, leaving a house underwater and a family homeless; leaving a widow without a lifeline, a widower without a line—a path—to safety and children without the means to pursue any number of life opportunities. Given these dangers, given the specific danger of losing a house to foreclosure, life insurance has the power to protect spouses and families from further suffering. 

Life insurance with mortgage protection allows families to shelter at home—to stay in their homes—rather than sheltering in place. Rather than leaving families seeking temporary shelter, or evacuating to emergency shelters, life insurance with mortgage protection not only diverts the course of a storm but dissipates it altogether. But families must first buy this protection, which means insurers must explain why families—particularly young families—need life insurance with mortgage protection. 

The explanation is a matter of basic math, where loss of life equals loss of income. This loss expands as bills accumulate and interest accrues, turning survivors of the hardest loss into nomads in a permanent state of hardship, turning the worst hard time into hard times without end, turning all time into the horrors of the end time.

This scenario is no exaggeration, as too many live to survive while too few have the protection to live well. For families to avoid this scenario requires the insurance industry to speak to the urgency of the issue. 

Emphasizing this issue, repeating the emphasis on having life insurance with mortgage protection, is a duty the insurance industry must honor. Anything less is a disservice to those who need to know the truth, that this protection is indispensable to honoring the terms of a mortgage without mortgaging the strength or savings of the good.

The good include families in pain, whose sorrow insurers can assuage through policies—life insurance policies—that are palliatives of a financial sort. That these palliatives may be curatives, that these treatments may have restorative properties, that among these properties are the protection of property and a source of monthly income—these goods are just and righteous.

Insurers must, however, promote this message.

See also: Simplicity, Magic in Life Insurance Sales

If insurers think people think of themselves as prospects, and consumers treat themselves as contacts, if insurers think lack of contact corresponds to lack of interest, that consumers have no interest in life insurance with mortgage protection, insurers need to rethink everything.

The insurance industry has a chance to broadcast a digital PSA, a public service announcement for online media, about the benefits of life insurance with mortgage protection.

Every post that highlights this message, every email that encapsulates this message, every message about this message advances a cause for the good. 

Every advancement due to this message is an act of goodness.

In writing this message, insurers have the potential to underwrite more life insurance policies with mortgage protection.

Much has been written, and much has been done in the past decade regarding the customer experience in P&C. Progress has been made in understanding customer needs and journeys, implementing digital solutions for mobile and self-service capabilities and improving interactions with agents and policyholders. However, anyone involved in strategies and improving the CX in P&C is likely to admit that the industry is still in the earlier stages of the journey. It is clearly a marathon, not a short term, once-and-done project. But now, as a result of the pandemic and the momentous events of the last year, the race has changed.

A new SMA research report, Customer Experience in P&C: Transformation in the Pandemic Era, assesses the journey of P&C insurers. Companies covering the personal lines, small commercial and mid/large commercial market segments are profiled based on a survey of executives and SMA’s analysis of customer experience projects with insurers.

About one-quarter to one-third of insurers are in broader rollouts of customer experience strategies, with the personal lines segment being the most mature. There is a correlation between the status and maturity of CX officers and the level of overall segment maturity. There are two categories of CX-related projects that are vital to track: those that are strategy/organizational in nature and those that are oriented around technology capabilities. For example, flipping the lens from a customer service to a customer experience orientation and establishing a customer-centric culture are the top two project areas, signaling a recognition that these are foundational elements of a good CX strategy.

See also: Lessons on Reaching Customers Remotely

The project plans recognize the change that is underway. While it may be hyperbole to say the pandemic changed everything, the pandemic and all that it has entailed altered customer expectations and caused insurers to rethink and reprioritize plans. The short-term focus has been on enabling and improving self-service, digital payments and digital intake for both sales and service. Improvements will continue, but, in the meantime, P&C insurers have been taking stock of their customer experience journey – and this is where they are running a marathon. What once was movement at a steady pace has now taken on steadily increasing momentum. Virtually every insurer is accelerating digital transformation, and customer experience is an important element.

However, now that the expectations of agents and policyholders have risen, the finish line for the marathon has been pushed out. It is not as if there was ever a firm finish line where a company could claim it was “done” with customer experience. But the race is now taking some new turns, will require adaptability and may require a longer sustained effort to remain competitive.

While agreement has grown in recent years that climate change is real, that humans are a major contributor and that it presents a grave danger, the consensus still leaves a lot of wiggle room. How fast is the world warming? How much influence do we humans have? How stark are the coming dangers, and when will they hit us?

Many have rallied to the climate change cause based on a perceived moral imperative – we owe it to our kids and grandkids to leave the planet in the best shape possible – but the realist in me knows that the effort will go to the next level once the cause turns into a clear economic argument. The argument would project costs related to climate change, writ large – the growing damage from wildfires and hurricanes, the damage to crops from increased heat, the costs of people having to relocate from the coasts as sea levels rise, etc. (Yes, the models are imprecise, but they’ve been getting better for a long time and will continue to do so.) The argument would then project the costs both of slowing the warming of the planet in the long run and of mitigating the short-term risks from those storms, fires and more. Once it becomes clear that the price of likely damage exceeds the cost of mitigation, then climate change expands from being a cause to being a calculation.

That may be starting to happen.

A group of universities and climate research organizations published a report recently that said that climate change contributed $8 billion of the $75 billion of damage that Superstorm Sandy wreaked on the Northeast in 2012. Based on extensive simulations, the group concluded that climate change had raised the water level by four inches in the Atlantic Basin. That doesn’t sound like much, but, once Sandy churned up a monumental storm surge at what turned out to be an extra high tide, the water level was 14 feet above normal in New York City – and the researchers concluded that the extra water from climate change meant that 71,000 homes were flooded that would otherwise not have been.

One data point does not a trend make (and some will challenge that data point), but I’m encouraged by this effort and hope that the real experts on risk – insurance companies – will increasingly weigh in on how to quantify what the costs of climate change will be and on how we might reduce those risks, so we can move from cause to calculation.

Investors are certainly encouraging interest. The Wall Street Journal reports that investments globally in funds focused on the environment hit $2 trillion in the first quarter and appear to have passed the tipping point. The WSJ says that investors are adding $3 billion a day to those funds and that $5 billion of bonds and loans are being issued daily to finance green initiatives – which would mean $3 trillion more for such initiatives just this year.

Since I helped with a book called “Resource Revolution” back in 2013, I’ve argued that a key approach to heading off climate change is to turn the market loose on it: Find ways to make it profitable to head off disaster.

Maybe we’re finally headed in that direction, if we can start to put a number on the costs of climate change while holding out really big numbers in front of those trying to innovate solutions.

Here’s hoping.

Cheers,

Paul

P.S. Here are the six articles I'd like to highlight from the past week:

State of Mental Health in the Workplace

As work from home continued, employers became even more aware of the impact of mental health and well-being.

Does Cyber Insurance Add to Ransomware?

There is literally no industry better positioned to fight cybercrime than the insurance industry.

Could COVID Help Life Insurance?

While the pandemic may have put the world on pause, it has put the modernization of the life insurance industry on fast-forward.

Simplicity, Magic in Life Insurance Sales

Everything we’ve learned about e-commerce design can be applied to the life insurance consumer--no matter where or how a policy is purchased.

COVID-19’s Impact on Replacement Costs

To make sure there are no surprises, asset owners across sectors need to ensure that their valuations are up to date.

Top Risk Concerns for 2021

Financial institutions face emerging risks driven by cyber exposures, a growing burden of compliance and the turbulence of COVID-19.

Many insurers are still uncertain as to how the pandemic has shifted the fraud landscape and its impact on their businesses.

Although digital transformation and automation has been underway for the better part of a decade, insurers have been faced with unprecedented and changing demand requiring resilience under extremely testing circumstances. However, one thing is clear; the inability for insurance companies to automate claims processing and proactively identify and mitigate emerging fraud threats is no longer an acceptable business practice as consumers demand better service.