Climate Risk Liability

Climate Change Hits the Courts

In a first-of-its-kind development, an insurer is suing municipalities for breaching their duty to prepare their infrastructure for climate-related exposures.
By: | May 21, 2014 • 2 min read

Municipalities have plenty of reasons to be receptive to the idea of public-private partnerships to further the cause of climate resiliency.

Add one more to the list: In a first-of-its-kind legal move, Farmers Insurance is suing Chicago and about 200 local municipalities for allegedly failing to adequately prepare for the impact of climate change.


The impetus for the lawsuit is the losses related to a storm that hit the Chicago region on April 17, 2013. The storm shut down major expressways and flooded hundreds of basements and streets, leaving some areas accessible only by boat.

Farmers claims that the defendants failed to “implement reasonable pre-storm practices” and breached their duty to upgrade sewer and water systems — the source of much of the property damage suffered by Farmers policyholders during the storm.

“If Farmers is successful, that might lead other insurers to file subrogation class actions,” Wystan Ackerman, a partner at Robinson & Cole LLP, told Law360. “But Farmers will face significant challenges in this first-of-its-kind suit.”

Ackerman told the publication that he expects insurers to take a wait-and-see attitude before joining the lawsuit.

“Insurance companies might be comfortable joining the case and [taking] advantage of the work that Farmers is doing if it is able to successfully pursue the case,” Ackerman said to Law360.

The lawsuit cited the Chicago Climate Action Plan as evidence that the towns knew of the danger of increasingly heavier storms.

Cash-strapped municipalities are already wrestling with costs related to climate change. If this lawsuit signals a shift in insurer strategies for mitigating climate change losses, the costs of such lawsuits will likely be passed along from both ends to double-whammy property owners and businesses, in the form of higher insurance premiums and an increased tax burden.

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at

More from Risk & Insurance

More from Risk & Insurance

2018 Risk All Stars

Stop Mitigating Risk. Start Conquering It Like These 2018 Risk All Stars

The concept of risk mastery and ownership, as displayed by the 2018 Risk All Stars, includes not simply seeking to control outcomes but taking full responsibility for them.
By: | September 14, 2018 • 3 min read

People talk a lot about how risk managers can get a seat at the table. The discussion implies that the risk manager is an outsider, striving to get the ear or the attention of an insider, the CEO or CFO.


But there are risk managers who go about things in a different way. And the 2018 Risk All Stars are prime examples of that.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Goodyear’s Craig Melnick had only been with the global tire maker a few months when Hurricane Harvey dumped a record amount of rainfall on Houston.

Brilliant communication between Melnick and his new teammates gave him timely and valuable updates on the condition of manufacturing locations. Melnick remained in Akron, mastering the situation by moving inventory out of the storm’s path and making sure remediation crews were lined up ahead of time to give Goodyear its best leg up once the storm passed and the flood waters receded.

Goodyear’s resiliency in the face of the storm gave it credibility when it went to the insurance markets later that year for renewals. And here is where we hear a key phrase, produced by Kevin Garvey, one of Goodyear’s brokers at Aon.

“The markets always appreciate a risk manager who demonstrates ownership,” Garvey said, in what may be something of an understatement.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Dianne Howard, a 2018 Risk All Star and the director of benefits and risk management for the Palm Beach County School District, achieved ownership of $50 million in property storm exposures for the district.

With FEMA saying it wouldn’t pay again for district storm losses it had already paid for, Howard went to the London markets and was successful in getting coverage. She also hammered out a deal in London that would partially reimburse the district if it suffered a mass shooting and needed to demolish a building, like what happened at Sandy Hook in Connecticut.

2018 Risk All Star Jim Cunningham was well-versed enough to know what traditional risk management theories would say when hospitality workers were suffering too many kitchen cuts. “Put a cut-prevention plan in place,” is the traditional wisdom.

But Cunningham, the vice president of risk management for the gaming company Pinnacle Entertainment, wasn’t satisfied with what looked to him like a Band-Aid approach.


Instead, he used predictive analytics, depending on his own team to assemble company-specific data, to determine which safety measures should be used company wide. The result? Claims frequency at the company dropped 60 percent in the first year of his program.

Alumine Bellone, a 2018 Risk All Star and the vice president of risk management for Ardent Health Services, faced an overwhelming task: Create a uniform risk management program when her hospital group grew from 14 hospitals in three states to 31 hospitals in seven.

Bellone owned the situation by visiting each facility right before the acquisition and again right after, to make sure each caregiving population was ready to integrate into a standardized risk management system.

After consolidating insurance policies, Bellone achieved $893,000 in synergies.

In each of these cases, and in more on the following pages, we see examples of risk managers who weren’t just knocking on the door; they were owning the room. &


Risk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, clarity of vision and passion.

See the complete list of 2018 Risk All Stars.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at