Tuesday, March 25, 2008

Insurers braced to weather climate change

Charles Mandel in CanWest News Service: …Climate change is the greatest strategic threat facing the insurance industry according to a new list of insurance risks that financial advisory firm Ernst & Young released on Monday, outlining the challenges insurers face.

"There's no doubt that going forward that climate change is indeed the single biggest risk faced by the property and casualty insurance industry," Mark Yakabuski, president and CEO of the Insurance Bureau of Canada, said in an interview Monday. He warned that even a dramatic reduction in greenhouse gases over the next 50 years would not ward off climate change's impact.

"The carbon dioxide and other pollutants that are already in the environment as a result of greenhouse gas emissions will be in our environment for at least 50 years," Yakabuski said. "They will motor the forces of climate change in a way that will give rise inevitably to more frequent, severe weather. That is one of the inevitable by-products of a warming planet."

It's easy to see just how significant the impact of those "inevitable by-products" have been from a recently released report that 145 Canadian scientists worked on for the last three years. The report, From Impacts to Adaptation: Canada in a Changing Climate 2007, lists a number of recent weather-related events and their damages. They include the 1998 ice storm affecting Ontario, Quebec and Atlantic Canada, at a cost of $5.4 billion, and the 1996 Saguenay, Que. flood with a $1.7-billion price tag. Other events include the 2003 wild fires in British Columbia and Alberta that cost $700 million, and extreme rains in Toronto that totalled $500 million.

…Tom Kornya, a partner with Ernst & Young, said weather-related change has quickly vaulted to the top of the insurers' problems, overtaking other challenges ranging from technology to emerging markets. "I guess when I look at this exercise, if we'd done it 10 years ago, it's probably fair to question whether climate change would have even made the list," Kornya said in an interview Monday.

Ernst & Young collaborated with Oxford Analytica to explore strategic business risks for 12 of the world's most important sectors, including insurance. The top 10 risks on the insurance list resulted from discussions between the company's global analysts and from leaders in more than 20 disciplines.

Doukhobor women are shown breaking the prairie sod by pulling a plough themselves, Thunder Hill Colony, Manitoba. c 1899, Wikimedia Commons

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