The insurance industry needs to “contribute to the ongoing debate of climate change,” Peter Dower, underwriting manager at Zurich Financial Services has told attendees at an Insurance Institute of London lecture.
“Most of the scientific community agree that climate change is with us,” Dower said. “The problem is what we’re going to do about it.”
In a speech entitled Climate Change and Extreme Weather: The Insurance Implications, Dower said that extreme weather events have cost insurers an average of $16bn a year since 1990, doubling in each of the past two decades. Trends in recent years indicate the hurricane cycle is changing, with hurricanes on the increase both in terms of frequency and severity.
Downer added that a small increase in hurricane windspeeds would result in a disproportionate increase in damage. ABI research forecast that if CO 2 emissions doubled from their current levels, hurricane windspeeds would increase by up to 6%. But under this scenario, the average yearly cost of hurricanes to the insurance industry would increase by two-thirds, from $16bn to $27bn, without taking into account inflation.
Dower said that while it is not the responsibility of insurers to create the social agenda, “we have to work out how to pay for it”.
He said that due to its experience of risk, the insurance industry can give some insight into the consequences of climate change. “The industry can be a messenger of change,” he said.
