Sunday, April 18, 2010
Insurers debate climate change
Regis Coccia in Business Insurance: Climate change's effect on the insurance industry and regulatory developments were among key topics discussed at the recent World Insurance Forum in Bermuda. An executive panel moderated by AXIS Capital Holdings Ltd. Chairman Michael A. Butt discussed whether climate change represents a threat or an opportunity for the global insurance industry.
By itself, “climate change is a threat to our business; it's not something we can safely muddle through,” said Barney Schauble, a managing partner at Hamilton, Bermuda-based Nephila Capital Ltd., an investment management company that specializes in insurance and reinsurance. “If pricing of existing products can reflect the underlying risk, then climate change is an opportunity—if not, then it's a threat,” he said.
David Bresch, head of sustainability and emerging risk management at Zurich-based Swiss Reinsurance Co., noted that climate change is difficult to translate into product pricing. “When we renew contracts, climate change is always high on the agenda. Quantitative assessment is utterly difficult, and it will be difficult to put those numbers into models,” he said.
The insurance industry has “the capacity to play an important role in the worldwide discussion of management of global warming,” said Peter Hoeppe, a professor of meteorology and biology and head of geo risks and the corporate climate center at Munich-based Munich Reinsurance Co. “The insurance industry is one of the largest investors in the world, and more and more investments are in new technologies” that can reduce carbon emissions, Mr. Hoeppe said.
Members of the industry have differing viewpoints, noted Rolf Tolle, former head of the franchise performance directorate at Lloyd's of London. “Where we have failed is in working with society and politicians and making it clear what the consequences are,” he said. “We're still not all marching in the same direction. With one voice as an industry, we could be much more effective” in leading the discussion on climate change.
…“Mitigating or reducing vulnerability is key to keeping risks insurable,” said Mr. Hoeppe. “For example, it is essential to avoid more development in flood-prone areas.”...
The effect of 1992's Hurricane Andrew on Miami
By itself, “climate change is a threat to our business; it's not something we can safely muddle through,” said Barney Schauble, a managing partner at Hamilton, Bermuda-based Nephila Capital Ltd., an investment management company that specializes in insurance and reinsurance. “If pricing of existing products can reflect the underlying risk, then climate change is an opportunity—if not, then it's a threat,” he said.
David Bresch, head of sustainability and emerging risk management at Zurich-based Swiss Reinsurance Co., noted that climate change is difficult to translate into product pricing. “When we renew contracts, climate change is always high on the agenda. Quantitative assessment is utterly difficult, and it will be difficult to put those numbers into models,” he said.
The insurance industry has “the capacity to play an important role in the worldwide discussion of management of global warming,” said Peter Hoeppe, a professor of meteorology and biology and head of geo risks and the corporate climate center at Munich-based Munich Reinsurance Co. “The insurance industry is one of the largest investors in the world, and more and more investments are in new technologies” that can reduce carbon emissions, Mr. Hoeppe said.
Members of the industry have differing viewpoints, noted Rolf Tolle, former head of the franchise performance directorate at Lloyd's of London. “Where we have failed is in working with society and politicians and making it clear what the consequences are,” he said. “We're still not all marching in the same direction. With one voice as an industry, we could be much more effective” in leading the discussion on climate change.
…“Mitigating or reducing vulnerability is key to keeping risks insurable,” said Mr. Hoeppe. “For example, it is essential to avoid more development in flood-prone areas.”...
The effect of 1992's Hurricane Andrew on Miami
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