Wednesday, December 9, 2009

Insurers at core of climate change fallout - ‘Climate change has the potential to bankrupt the industry’


By Kim Hjelmgaard, MarketWatch

COPENHAGEN (MarketWatch) -- With the number of extreme weather events continuing to grow around the world the insurance industry is finding itself at the very center of efforts to avert the worst effects of climate change.

But as drought and demand for water intensify; heat waves become more severe; downpours more violent; and destructive coastal flooding more frequent, some even in the industry say its traditional risk-management tool may not be up to the task.

"Perhaps no industry is as aligned with the interests of a changing climate as the insurance industry is," said Patrick M. Liedtke, managing director of the Geneva Association, an industry body, at a side-event at the U.N. Climate Change Conference in Copenhagen on Wednesday.

"But [tackling climate change] is not something that the industry can do by itself," Liedtke added.

"It requires flanking action from governments, policy makers, regulators, NGOs and a lot of public dialogue. The whole world can't be insured, only parts of it."

"Insurers are on the front lines of climate change," added Andrew Logan, director of the investor group Ceres' insurance program, in an interview.

"Climate change has the potential to bankrupt the industry, or at the very least make it a lot smaller and a lot less profitable. So insurers have every incentive to push for solutions to climate change, including advocating for strong public policy."  …

Insurers at core of climate change fallout

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