Comment: Insurers – say something, at least

Comment: Insurers – say something, at least

Hear no evil, speak no evil, see no evil: the insurance industry hasn’t reacted at all to the latest assessment by the Intergovernmental Panel on Climate Change. Maybe CEOs were looking the other way or didn’t get a paper that day (it was a Friday). Or maybe they’re just in denial. In denial of a study that was put together by hundreds of scientists and by over 1,000 reviewers?

To recap, these are the headline findings of Climate Change 2013: the Physical Science Basis, approved by member governments of the IPCC in Stockholm.

Human influence on the climate system is clear and it is evident in most regions of the globe.
It is extremely likely that human influence has been the dominant cause of the observed warming since the mid-20th century. The evidence for this has grown, thanks to more and better observations, an improved understanding of the climate system response and improved climate models.

The atmospheric concentrations of carbon dioxide (CO2), methane, and nitrous oxide have increased to levels unprecedented in at least the last 800,000 years. CO2 concentrations have increased by 40% since pre-industrial times, primarily from fossil fuel emissions and secondarily from net land use change emissions. The ocean has absorbed about 30% of the emitted anthropogenic carbon dioxide, causing ocean acidification.

Warming in the climate system is unequivocal and since 1950 many changes have been recorded throughout the climate system that are unprecedented over decades to millennia. Each of the last three decades has been successively warmer at the Earth’s surface than any preceding decade since 1850, according to the IPCC’s Summary for Policymakers.

In the Northern Hemisphere, 1983–2012 was likely the warmest 30-year period of the last 1,400 years.

The findings make painful reading partly because we know the science is rigorous. Observations of changes in the climate system are based on multiple lines of independent evidence. The panel’s assessment of the science finds that the atmosphere and ocean have warmed, the amount of snow and ice has diminished, the global mean sea level has risen and the concentrations of greenhouse gases have increased.

The rate of sea level rise since the mid-19th century has been larger than the mean rate during the previous two millennia. Over the period 1901–2010, global mean sea level rose by 0.19 <0.17 to 0.21> metres.

Thomas Stocker, co-chair of the working group, said that continued emissions of greenhouse gases will cause further warming and changes in all components of the climate system and that limiting climate change will require substantial and sustained reductions of greenhouse gas emissions.

“Global surface temperature change for the end of the 21st century is projected to be likely to exceed 1.5C relative to 1850 to 1900 in all but the lowest scenario considered, and likely to exceed 2C for the two high scenarios,” said Stocker. “Heat waves are very likely to occur more frequently and last longer. As the Earth warms, we expect to see currently wet regions receiving more rainfall, and dry regions receiving less, although there will be exceptions,” he added.

The scientists’ projections of climate change are based on a new set of four scenarios of future greenhouse gas concentrations and aerosols (representative concentration pathways or RCPs), spanning a wide range of possible futures. The report assessed global and regional-scale climate change for the early, mid-, and later 21st century.

Global surface temperature change for the end of the 21st century is likely to exceed 1.5°C relative to 1850 to 1900 for all scenarios except “RCP2.6”. It is likely to exceed 2°C for RCP6.0 and RCP8.5, and more likely than not to exceed 2°C for RCP4.5. Warming will continue beyond 2100 under all RCP scenarios except RCP2.6. Warming will continue to exhibit interannual-to decadal variability and will not be regionally uniform.

As the ocean warms, and glaciers and ice sheets reduce, global mean sea level will continue to rise, but at a faster rate than we have experienced over the past 40 years. The global ocean will continue to warm during the 21st century. Heat will penetrate from the surface to the deep ocean and affect ocean circulation.

It is very likely that the Arctic sea ice cover will continue to shrink and thin and that Northern Hemisphere spring snow cover will decrease during the 21st century as global mean surface temperature rises. Global glacier volume will further decrease.

The report finds with high confidence that ocean warming dominates the increase in energy stored in the climate system, accounting for more than 90% of the energy accumulated between 1971 and 2010.

Stocker concluded: “As a result of our past, present and expected future emissions of CO2, we are committed to climate change, and effects will persist for many centuries even if emissions of CO2 stop.”

So the insurance sector, whose revenues are more sensitive to changes in the weather than any other sector with the possible exception of agriculture, is faced with an exponentially risky operating environment. And this is happening at a time when insurers are driving headlong into emerging economies that are the least prepared and likely to be hardest hit by the effects of climate change. 

(In Thailand, concern was growing that a repeat of the floods experienced in 2011 was underway the same weekend that the IPCC released its report.)

Against this backdrop, insurance industry leaders that have been mute over the IPCC’s findings would do well to heed the words of Dr Celine Herweijer, partner, sustainability and climate change, at PwC. “Let's be clear about one thing. Planning for a 2C world is about business resilience. Planning for a 3C or a 4C world is about business survival, or societal survival. It’s not a world any of us should be planning for.”

Latest Issue

October 2018


In this month's Reactions

  • Monte Carlo roundup
  • National Flood Insurance Program
  • Munich Re roundtable
  • Liberty Mutual roundtable
  • US Cannabis industry
  • Kidnapping & Ransom cover
  • Marsh & McLennan acquiring JLT



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