By John Parnell
A leading insurance think tank overseen by executives from some the world’s top firms has called on governments to step up effort to protect against the effects of climate change.
The Geneva Association warned that warming oceans, the main conveyor of heat around the globe, have now locked-in shifts in climate regardless of how successful attempts to reduce greenhouse gas emissions are.
In a new report, the think-tank said the changes men the industry will have to change the way it predicts the chances of risks like floods and droughts hitting.
“Given that energy from the ocean is a key driver of extreme events, ocean warming has effectively caused a shift towards a ‘new normal’ for a number of insurance relevant hazards,” said John Fitzpatrick, secretary general of the Geneva Association.
“This shift is quasi irreversible – even if greenhouse gas (GHG) emissions completely stop tomorrow, oceanic temperatures will continue to rise.”
Superstorm Sandy cost insurers an estimated $50bn (Source: Flickr/spleeness)
The report identifies three potential areas where shifts in ocean temperatures could have an effect on climate patterns, and on the way they currently decide how likely certain damaging weather events could take place.
Higher sea levels, largely from thermal expansion will mean existing tidal defences are less effective.
“Drier dry and wetter wet” will shift rainfall patterns create more challenging, less predictable conditions for agriculture.
The impact on large scale weather patterns such as the Monsoon and the El Niño and La Niña cycles are currently poorly understood adding further uncertainty.
The report’s lead author Falk Niehorster said the industry would have to change the way it currently estimates risk and calculates premiums.
“In the non-stationary environment caused by ocean warming, traditional approaches, which are solely based on analysing historical data, increasingly fail to estimate today’s hazard probabilities,” he said. “A paradigm shift from historic to predictive risk assessment methods is necessary.”
Adaptation
The insurance sector is considered crucial by many to trigger investment in climate resilient infrastructure.
Investing to avoid losses is often a harder sell than projects to directly cut costs, such as energy efficiency.
“The ability to finance infrastructure for resilience and adaptation is a priority and a challenge for a number of our cities,” Terri Wills of the C40 initiative told RTCC.
“We’re involving the insurance and re-insurance firms in this. They are important partners in this. They understand the issues and are very close to them. They’ll be critical in figuring out how to approach adaptation and resilience finance,” she added.