Insurers are showing signs of trying to adapt their business models to issues related to climate change, but more work needs to be done as environmental liabilities increase, according to a report by the Boston-based Ceres investor coalition.

From Risk to Opportunity: Insurer Responses to Climate Change 2008, outlines 643 climate-related activities that 244 insurers from 29 countries put in place over the past year to deal with growing exposures resulting from climate change. According to Ceres, insurers "have begun to embrace a more sophisticated approach to climate change," but the industry is "still in its infancy" as far as product development, services and coverage.

"In many ways, insurers are still catching up to their customers, who are rapidly changing the way they construct buildings, design products and produce energy in response to climate change," Evan Mills, the report's author and a scientist at the U.S. Department of Energy's Lawrence Berkeley National Laboratory, said in a statement.

Property/casualty insurers are dictating much of the industry's climate change-related activity in offerings of auto, homeowner and commercial coverage, products and services, according to the April 2 report. Some commercial offerings include coverage for wind and solar power production shortfalls, premium discounts for energy-efficient building renovations, carbon capture and storage insurance.

Life and health insurers, however, are "far behind" other insurance segments, the report states; there has been little to no activity in certain segments, including offshore property, aviation and ocean marine, the report said.

European insurers account for 40% of all climate change-related activities and U.S. insurers account for 37%, the report said. Asian and Australian insurers accounted for the bulk of changes for the remaining 23%. Climate change activities include promoting loss prevention, crafting innovative insurance products, building awareness and public policy participation, and disclosing carbon risks.

The report noted that U.S. insurance brokerages have shown "significant leadership" in instituting climate change insurance initiatives.

"Still, the scope and breadth of insurer response fails to match the scale of urgency of the risks--or the opportunities--facing the industry," Mindy S. Lubber, president of Ceres, said in a statement. "Insurer attention to climate change is hugely important because the insurance industry underlies every aspect of the economy and has the power to transform the global energy system to one that is cleaner and more sustainable."

The full report can be viewed at http://insurance.lbl.gov/opportunities/risk-to-opportunity-2008.pdf.