Insurers are uniquely positioned to serve as global intermediaries in dealing with climate change, according to a new US study.

The success of the global response to climate change hinges on how well the insurance industry adapts. This is the contention of the 84-page study"Limiting liability in the greenhouse".

Co-authored by environmental consultant Christina Ross, US Department of Energy scientist Evan Mills and Los Angeles law expert Sean Hecht, the report details how insurers can modify their business to reduce internal and third-party liabilities.

The report recommends that industry develops products to cover climate-friendly technologies, capitalise on emerging climate change industries – such as emissions trading – and reduce its carbon footprint.

Public education on climate change and using “market withdrawal” as a last resort are also recommended in the study.

“The insurance sector is uniquely positioned between the two ends of the climate change spectrum – the causes and impacts.

“Proactive approaches are likely to yield a ‘win-win-win’ situation, in which insurers, policyholders and third parties affected by climate change-related externalities will all benefit from decreased risk.

“The insurance industry, perhaps more than any other institution, has the power to set the stage for enduring and significant contributions to solving the problem of global climate change.”