Insurers must address global climate change as they cope with the growing cost of extreme natural disasters, said Lord Peter Levene, chairman of Lloyd’s, the London insurance market.
“We cannot risk being in denial on catastrophe trends,” Levene said today in a speech to the World Affairs Council at the National Press Club in Washington, D.C. “We urgently need a radical rethink of public policy, and to build the facts into future planning.”
Levene said the number of natural catastrophes has doubled since the 1960s. At the same time, insured losses have increased nearly seven-fold, most of them weatherrelated. The worst year on record came in 2005 with total global insurance claims of $83 billion – over 80 percent from U.S. hurricanes.
“Over the coming years, with warmer sea surface temperatures making landfall more likely, particularly destructive storms are a likely scenario,” Levene said. “We can expect the storm season to lengthen, and we will be at risk over a wider geographical area
than ever before.”
Levene said there was a growing acknowledgement among insurers that global climate change was playing an adverse role.
“We need to take co-ordinated action on climate change,” Levene said.
Levene said Lloyd’s is taking steps to address climate change by investing in new scientific research in the U.S. and U.K. Lloyd’s also insures new green technology, including a third of insurance for waste-to-energy recycling plants and a quarter of the world’s wind farms.
“There is an important role which business can play and there is commercial benefit to be gained from doing so,” Levene said.
With the insured value of properties in U.S. coastal areas doubling over the last decade to more than $7 trillion, Levene said insurers must push for action to limit the potential threat of climate change.
“Two years after Katrina, and two years away from a national election, where’s the public debate on catastrophe trends?” Levene said, adding Lloyd’s has recently developed a $100 billion loss scenario for a major windstorm hitting the U.S. Gulf or East Coast.
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