RMS Comments on Importance of UK Climate Impact Report

June 19, 2009

The UK Climate Impacts Programme (UKCP) unveiled a crucial new report projecting that sea level rise will continue, and that severe rainfall is likely to increase in winter. In the South of the UK – taking a medium-impact scenario – the wettest winter day could be as much as 20 percent wetter by 2050.

Risk Management Solutions, which has been involved in the preparation of the report, published a number of comments on its importance.

Domenico del Re, director of model management at RMS, noted: “The time period for these predicted changes extends far beyond the typical 5-year horizon which informs insurers’ underwriting and portfolio management decisions. Even so, taking these findings to the next level to reliably assess the likely longer-term impact on flooding requires a level of detail that is not presently available. Ultimately the insurance industry wants to know how future climate will impact the occurrence of damaging events such as floods and severe storms, and unfortunately this can’t yet be accurately predicted,”

He added that the report “provides the industry with an important canvas to build strategies to prepare for different scenarios of future climate risk. Risk management and financial protection measures can be put in place that echo the uncertainty around the predictions.”

He also pointed out that the “insurance industry has an opportunity to take the lead in promoting property adaptation to future climate. Offering premium incentives and lobbying development planning policy are just two potential avenues, and ones which RMS has already started to explore.”

According to a recent RMS/Lloyd’s report, with an effective adaptation strategy, future losses for high-risk properties from coastal flooding- which will increase with sea level rise- could be reduced to below present-day levels with losses for high-risk properties reduced by as much as 70 percent.

The report may be accessed at: http://ukclimateprojections.defra.gov.uk/content/view/1794/510/index.html

Source: Risk Management Solutions – www.rms.com

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