Actuarial Groups Launch Climate Measurement Tool
Last week, four actuarial groups in the United States and Canada introduced the Actuaries Climate Index, an online tool that measures changes in extreme weather events and sea levels.
In just the last few months, droughts and fires have plagued Tennessee, and heavy rains and floods have deluged Louisiana. Extreme weather events like these seem much more frequent, but in order to measure and analyze weather conditions like these, four actuarial groups—the American Academy of Actuaries, the Canadian Institute of Actuaries, the Casualty Actuarial Society, and the Society of Actuaries—developed the Actuaries Climate Index (ACI).
With this free tool, these groups hope to better serve their member actuaries who are increasingly asked to weigh in on climate trends and their impact. But ACI is also available to policymakers and the general public who are interested in the changing patterns of extreme weather.
“The Actuaries Climate Index is designed to provide objective data about changes in the frequency of extreme climate events over recent decades in the continental United States and Canada,” said Doug Collins, chair of the climate change committee, which led the development of the index, in a news release [PDF].
This index is based on the measurement on “the changes in the frequency and duration” of six different metrics:
- high temperatures
- low temperatures
- heavy precipitation
- high wind
- sea level
These numbers are then examined across 12 zones in the U.S. and Canada, with data that goes back to 1961. Moving forward, ACI will be updated on a quarterly basis as meteorological data becomes available.
The data will have real implications on consumers’ insurance needs, as well as the insurance industry at large. For instance, rising sea levels increase the risk of floods to properties along the coasts; homeowners of those properties should be adequately prepared with the right amount of flood insurance. Likewise, persistently warmer temperatures have an effect on life and health insurance—and even crop insurance for farmers.
“We hope that actuaries, policymakers, and the public will use the Actuaries Climate Index website as an educational tool to learn about the effects of climate change on extreme weather,” Collins said. “We also hope that actuaries and other researchers will use the index’s download data in their models.”
In addition, the groups hope to launch the Actuaries Climate Risk Index in the first half of 2017. This index will not only build on the data gathered in ACI but also measure correlations between changes in the frequency of extreme events and data on economic losses, mortality, and injuries, according to Collins.