Considering climate change and claims

Any cursory internet search of the terms ‘climate change’ and ‘insurance’, would have you believe that the global re/insurance industry is facing a radical increase in insured losses due to an influx of disasters. However, hunting out actual hard data regarding the subject is difficult to find, with much of what is written highly speculative. A host of reports have highlighted that 2017 was the worst year ever for insured catastrophe losses, the most recent of which was published by Swiss Re. Climate change has been singled out as a culprit for the spike in insured losses which have been steadily increasing for some time, although whether the rising temperatures are actually to blame remains to be seen . Instead, economic growth can be pointed at as the cause of recent rising insured losses. “If you factor in economic growth in these recent loss statistics, then you do not have clear evidence of the impact of climate change yet,” said Luzi Hitz, chief executive of Perils AG. According to David Bresch, professor for weather and climate risks at ETH Zurich and former head of atmospheric perils as well as the previous global head of sustainability at Swiss Re, there is not yet enough data to correlate the impact of climate change with insured losses. Climate change is a precarious topic for insurers in particular as any major shifts in the frequency or severity of major catastrophes could hit their bottom lines hard. As such, they must prepare for the possibility that climate change could cause a spike in losses. “Clearly climate change is something you can measure, especially in terms of temperature increases. What’s also a given is that insured losses are increasing,” Hitz told Reactions. Temperatures around the globe have risen measurably by roughly 1.1 degrees Celsius since the late 19th Century according to the National Aeronautics and Space Administration (NASA), but what has not been statistically proven is the link between climate change and an increase in insured losses. “If you factor in economic growth to these loss statistics, then you do not have clear evidence of the impact of climate change yet,” Hitz said. “We do not yet have in the historical data set of industry losses a clear signal of the impact of climate change,” he added. That is not to say that the link between insured losses and climate change will never be made, but that link does not exist now. That may well change in the future though as the climate continues to shift, and more extreme weather events are recorded in the future. According to Hitz, “the time period for which reliable loss numbers are available is too short really to have reliable statistics to say what the trend is, whether it’s upwards or downwards once you correct for economic growth”. “For European windstorms, we’ve looked at roughly the last 40 years and that’s approximately the time when warming started to accelerate. It would be interesting to have another 40 years in the past to look back at, so 80 years total. The other alternative is that we wait another 40 years or so, and then we’ll have a clear database with historical losses, and then you can really know whether or not the climate change models are accurate.” “For the time being, with the limited time-period available for reliable historical losses, the only things one has to rely on are the climate change models and how they think the weather patterns will change,” he added. Bresch agreed that... CLICK HEADLINE TO READ MORE

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