Thursday, November 5, 2009

Paying the climate change premium

Ready to have your insurance rates go up? That’s what one industry group says will happen as climate change disrupts the world’s weather.

The Association of British Insurers said the cost of flood and windstorm damage would rise for insurers as global temperatures increased.

This would lead to higher premiums for consumers and a restriction of cover as insurers would need more reserves.

“These findings have serious implications for insurers, householders, businesses and governments,” said Nick Starling, the ABI’s director of general insurance and health.

“The continued widespread availability of property insurance in the future depends on taking action now to manage the threats of climate change.”

We normally think of the insurance industry as conservative, but when it comes to climate change, it’s been extremely aggressive. After all, that’s what the insurers do: analyze and seek to minimize risk–and global warming has made them increasingly worried about their bottom line. In fact, it’s the industry’s very conservativeness that made it one of the first to bang the drum about the perils of a warming world.

For example: Swiss Re, the world’s largest re-insurer, keeps three climatologist on staff. It has tracked rising damages from natural disasters for decades. Something like 20 years ago, it released its first report warning of the road that lay ahead. The graph up above is from a report they released on the future impacts of climate change.

The rest of the article is here.

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