While U.S. property/casualty insurers have been dealing with the effects of weather and climate changes for years, 2015 may be the year they start zeroing in on the idea of attacking global warming at its source, a new report says.

The report, “2015 Property and Casualty Insurance Outlook: Focusing on the big picture,” published by the Deloitte Center for Financial Services earlier this week, identifies U.S. insurer efforts aimed at “getting ahead of climate change” as one of four big picture trends for 2015.

“While U.S. insurers have been at the forefront in terms of advocating stronger building codes, updated flood mapping, and more hazard-sensitive zoning laws for property development, up until recently they have tended to take a far lower profile than a number of their European counterparts in efforts to limit global warming at its source by increasing sustainability and limiting carbon emissions,” the report says.

That’s changing, says Sam Friedman, Insurance Research Leader at the Deloitte Center for Financial Services and lead author of the outlook report, who pointed to potential scrutiny from regulators and ratings agencies as motivating factors. He also noted the unwelcome attention the insurance industry got from the non-profit organization Ceres, an advocate for sustainability leadership, which accused the insurance industry of being generally clueless on climate change issues in a report last year.

The Ceres report was based on a survey of 330 insurer disclosures in response to a climate risk survey developed by the National Association of Insurance Commissioners.

“The insurance industry in the United States has certainly not been dormant in this area,” Friedman said in a recent interview with Carrier Management, characterizing the Ceres report as unfair. U.S. insurers have been “very involved through various institutes to try to build up building codes, to try to warn communities about the hazards of flood zones …Sometimes that’s fallen on deaf ears. But I don’t think the industry has been disengaged.”

Friedman does think, however, that the focus of the U.S. industry has been limited to the aftereffects and mitigation of the impact of the changes in climate and in disaster patterns.

In the U.S., insurers have “steered clear [of] what may be leading to these [disaster] events or prompting an increased frequency and severity, and what might be done to draw back on that—to get at the source,” he said, speculating that “the political controversy” surrounding the climate change debate might be at the root of this.

“In Europe, a number of the major carriers have taken a lead in looking to see how they can mitigate the possible causes of [weather] events and to try to control the expansion of global warming.”

“We think that the [U.S.] industry, both on an individual basis and perhaps collectively, will become more engaged with this. Frankly, as the risk rises, it’s in their best interests to be at least positioned to have an impact on stopping this at the source if the scientific community proves to be correct.

“If they don’t, I don’t know how much will be lost, at least from the insurance industry’s perspective, in trying to promote some of these efforts on sustainability and the like.”

“Beyond any mandatory compliance responsibilities and costs, the possibility of increased frequency and severity of climate-related disaster losses should motivate insurers to voluntarily expand their research efforts into how climate change may be disrupting the communities they serve, as well as affecting their bottom lines,” the Deloitte report says, adding that carriers will likely need to beef up their staffs in new ways to expand skill sets that give them a better handle on weather trends.

“One can imagine climatologists becoming valuable members of an insurance company’s modeling team and underwriting department as carriers look to become more adept in pricing climate-change-related exposures,” the report says.

Friedman also noted that U.S. insurers are likely to be fielding more questions about climate change issues from external parties—regulators and rating agencies—in the near future. As an example, he said that the National Association of Insurance Commissioners has put a Climate Change and Global Warming Working Group in place to investigate the possible effect of weather pattern changes on insurer catastrophe modeling and investment portfolios.

As they dig deeper into carriers’ catastrophe models, he imagines some external parties saying, wondering about the resiliency of the carriers themselves and asking, “‘How able are you to get in and take care of claims if you are situated in an area that’s hit by a disaster?'”

Friedman already sees the U.S. insurance industry stepping up to the plate on climate change. He noted, for example, to a joint project of several actuarial organizations (the American Academy, the Casualty Actuarial Society, the Society of Actuaries and the Canadian Institute of Actuaries) who have teamed up to develop an Actuaries Climate Index. (The index “will be aimed at the general public to paint a compelling picture of climate phenomena,” according to a statement from the actuaries.)

Friedman also predicts that insurers in the U.S. will “step up and continue to push the envelope when it comes to mitigating the immediate effects” of climate change, pointing to a big area of opportunity for insurers in the flood insurance market as it moves towards greater privatization. “More and more private carriers are trying to ease back into that market, even in an area like Florida, which is very prone to this,” he told Carrier Management.

“We’ll see how that develops over time as there’s pressure on the government to get out of the flood insurance business. The question is whether insurance companies will have an environment that will allow them to pick up the slack and write this coverage profitably,” he said, citing the need for actuarially sound rates.

The Deloitte report also notes the potential for insurers to capitalize on a growing market for sustainability-related products and services.

In addition to responding to climate change, the outlook report details three other big-picture strategies that Deloitte thinks P/C insurers should be focused on in the years ahead, all requiring integrated enterprise-wide responses: achieving data fluency, upgrading capital management frameworks and transforming compliance activities to response continued regulatory challenges.

*To learn more about these topics, Carrier Management recently conducted video interviews with Friedman, Eric Clapprood, a principal for Deloitte Consulting, and Howard Mills, a former Superintendent of the N.Y. Insurance Department, who is now director and chief advisor for the Insurance Industry Group. The videos, filmed at the Property/Casualty Insurance Joint Industry Forum, will be available for viewing on the Carrier Management channel of the insurancejournal.tv website later this month.