Europe’s largest insurer, Germany’s Allianz SE, posed the following question: “How does climate change affect the business model of a large insurance company?”
In order to find the answers Allianz announced that it’s now part of a “unique consortium including JBA Consulting, InterMap Technologies, the UK Met Office and WWF Germany.” These public and private bodies may combine the expertise required “in order to scientifically assess this question. The unparalleled study proves the viability of using currently available methods and data to manage future extreme risks.”
Allianz noted that “although the current financial crisis in Europe has pushed climate change down the agenda in the public sphere, it is still a very high priority for businesses. The enormous damage caused by major floods in Europe, the US, Thailand and Australia over the last years has demonstrated the need of producing risk models to anticipate the likelihood and severity of flooding in vulnerable areas.”
In addition Allianz gave the “unprecedented rainfall in the Venice region on September 26, 2007, with intensity close to 300 mm [just under 12 inches] per day measured at one station,”as a “reference event for the study which offers a blueprint for innovate climate modelling.”
The cutting-edge approach in applying climate science to business combines a number of unique aspects. Allianz said it can assess “the potential climate change impact on the business model of a large insurance company.” It analyzes the potential risks from previously under-researched perils “by linking observed current rainfall extremes and flooding to future climate risks by the means of climate and hydrological modeling.”
The project has also “developed new methods that can be applied globally when sufficient observations exist. The researchers made progress particularly by increasing the resolution of the currently available climate model from 100 x 100km to 5 x 5km [62.5 miles down to 3.125 miles].”
Dr. Markus Stowasser of Allianz Re’s catastrophe research and development unit, stated: “This was really uncharted territory, but we now have a much better idea of how we could better model these events in future. The work that was done here is not only relevant for the insurance industry to better understand the ranges of uncertainty addressed by these models and methods, but it will also be of interest for certain sections of the scientific world.”
Allianz cautioned that “while the value of the study is much less in actual predictions and more in the potential and possibilities of new methods and processes, the study indicates that an increase in the intensity of future surface flooding events in the selected area is plausible.”
The first example using the combined resources examines flooding in Northern Italy.
Source: Allianz SE
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