Emerging Issues: Global Warming Claims and Coverage Issues

Article excerpt

I. AN INTRODUCTION TO THE POLARIZING AREA OF GLOBAL WARMING

THE ISSUE of global warming or climate change remains a polarizing subject and a continuing source of heated political, social, and economic debate. On one end of the spectrum, there are those who subscribe to the belief that global warming poses a devastating threat to continued life on the planet. This group points to the intensified hurricanes that have battered the South in the last few years (Katrina, Rita, and others), flooding coastlines, the raging wildfires in the West, the El Nino phenomenon, droughts in Africa, rising sea levels in Asia, and a host of other matters as signs of a serious existing problem and as frightening signals of things yet to come. It has been argued in some American courtrooms that human-induced global warming has, among other things, reduced California's snow pack--a vital source of fresh water, raised sea levels along California's coastline, increased ozone pollution in urban areas, increased the threat of wildfires, and cost the State of California millions of dollars in assessing those impacts and preparing for future impacts. (1) On the other end of the spectrum, there are those who maintain that the "threat of catastrophic global warming [is] the greatest hoax ever perpetrated on the American people." (2)

This article is not a foray into the political debate on global warming; but instead, it is intended to provide insurance and reinsurance professionals and practitioners with an overview of global warming, the legal theories, defenses, and early results in underlying litigation predicated upon global warming, and some of the coverage issues and defenses that may be presented by global warming claims. Global warming is an emerging, dynamic area with enormous implications to the insurance industry.

Understandably, much of the focus on the impact of climate change has been on first-party policies in view of the recent hurricane experiences. Many of the early underlying cases have involved efforts to require governmental entities to regulate such things as emissions of greenhouse gasses--which generally do not name corporate policyholders and, viewed properly, generally should not be covered under their liability policies--or actions by private parties or government entities seeking declaratory and injunctive relief as opposed to damages. As the focus shifts to claims seeking damages against corporate policyholders and professionals based upon alleged culpable conduct, more companies and professionals will turn to their liability insurers, seeking to be defended in lawsuits and indemnified for resulting settlements and judgments. As the allegations may implicate conduct, knowledge, and damages dating back in time, the potential exists for policyholders to seek to implicate policies issued years or decades earlier. Yet, insurers will have substantial coverage defenses to many such claims.

II. THE GLOBAL WARMING PHENOMENON 101: THE BASICS

A. "Climate Change"--A Consensus Emerges

The U.S. Environmental Protection Agency ("EPA") defines the term "climate change" as "any significant change in measures of climate (such as temperature, precipitation, or wind) lasting for an extended period (decades or longer)." (3) According to the United Nations Framework Convention on Climate Change, climate change is, "a change of climate which is attributed directly or indirectly to human activity that alters the composition of the global atmosphere and which is in addition to natural climate variability observed over comparable time periods." (4) At its core, the fundamental premise of global warming is that energy from the sun heats the earth, which radiates the energy into the earth's atmosphere (5) Atmospheric greenhouse gasses, such as carbon dioxide, trap some of the outgoing heat in the earth's atmosphere. Carbon dioxide emissions are reported to persist in the atmosphere for several centuries and, thus, have a lasting effect on climate. …