Insurers See Growing Risks and Costs from Climate Change

Mar 21, 2012 - digg.com

WASHINGTON, March 1 - Coming off a year of record-setting $1 billion-plus natural disasters, representatives of leading insurance companies said today that costs to taxpayers and businesses from extreme weather will continue to soar because of climate change.

The insurers joined Sens. Bernie Sanders (I-Vt.) and Sheldon Whitehouse (D-R.I.) at a press conference to discuss the mounting financial impact of global warming. Both Vermont and Rhode Island last August felt the brunt of Tropical Storm Irene, one of the record 14 natural disasters in the United States last year that each caused more than $1 billion in damage. Irene alone, which first came ashore as a hurricane, killed at least 45 people and caused more than $7 billion in damage.

"Perhaps no industry better understands the impact of global warming than the insurance industry whose job it is to analyze risk," Sanders said. "I am pleased leaders in that industry are speaking out about the need to reverse global warming." Added Whitehouse, "Extreme weather events, like Rhode Island's historic floods in 2010, can result in the loss of homes, livelihoods, and even lives.  These extreme events fit a pattern predicted by climate scientists, and we should take action now to minimize the damage that carbon pollution is causing to our country and our world."

Property and casualty insurers in the United States experienced an extraordinary estimated $44 billion in losses last year when hurricanes, droughts, tornadoes and other natural disasters were more severe, longer, more frequent and less predictable than in the past. "From our industry's perspective, the footprints of climate change are around us and the trend of increasing damage to property and threat to lives is clear," said Franklin Nutter, president of the Reinsurance Association of America.

According to Swiss Reinsurance Company Ltd., the average weather-related insurance industry loss in the U.S. was about $3 billion a year in the 1980s compared to approximately $20 billion annually by the end of the past decade. "A warming climate will only add to this trend of increasing losses, which is why action is needed now," said Mark Way, head of Swiss Re's sustainability and climate change activities in the Americas.

a"Extreme weather is a threat today and a greater threat tomorrow," said Pete Thomas, chief risk officer at Willis Re, one of the world's leading reinsurance intermediaries. "I'm pleased to see the federal government grappling with this issue. The continuing work of Sens. Sanders and Whitehouse is an important start for this necessary dialogue."

A senior official at Ceres, a coalition of investors and public interest groups, put it bluntly. "Our climate is changing, human activity is helping to drive the change, and the costs of these extreme weather events are going to keep ballooning unless we break through our political paralysis, and bring down emissions that are warming our planet," said Cynthia McHale, the insurance program director at Ceres. "If we continue on this path, extreme weather is certain to cause more homes and businesses to be uninsurable in the private insurance market, leaving the costs to taxpayers or individuals."