Global warming is causing climate changes, and these changes are posing newer risks to insurers! The global insurance industry is facing risks from increased incidence of cyclones, floods, drought and bushfires. This was the topic that was discussed and concern at the Greenhouse 2007 conference.
Despite debates around the causes and effects of climate change, scientific evidence shows that global temperature; sea levels and rain fall are rising faster than previously thought. If the industry wants to survive, it must adapt its responses to these trends sooner rather than later.
At the moment, the industry is lagging behind. The fact that no-one has an accurate picture of the financial impact climate change could have on the industry is a clear indication that more needs to be done.
To cite a few examples of climate catastrophes, Hurricane Katrina caused about $66 billion in losses in 2005 when it devastated the southern United States city of New Orleans; just a year after Hurricane Ivan caused $13.7 billion in property damage in the Caribbean.
The insurance industry needs to figure out how to work in partnership with governments and businesses to look for practical solutions to help society adapt to climate change.
Such partnerships would help to mitigate risks such as the number of people living on coastlines, and start moving in the direction of reducing CO2 emissions.
Also a new approach to underwriting, with pricing and capital allocation models regularly being updated to reflect the latest scientific evidence is required to be put into place.
Via:ENN
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