Insurers push for financing package to help the poor

The world’s major insurance companies have warned that some risks resulting from weather-related disasters may become uninsurable if no action is taken to reverse climate change.

“Climate change must be tackled now if insurers are to continue to play their fullest role in managing climate risk,” said Andrew Torrance, Chairman of ClimateWise, a grouping of 40 insurance companies.

“If governments fail to act today, substantial markets may become uninsurable tomorrow. A new international deal is ultimately in all of our interests. Delay is not an option,” said Mr Torrance, who is also the CEO of Allianz Insurance.

Other members of ClimateWise include AIG, Zurich, Prudential and Llyod’s.

Clear package

ClimateWise said developed countries should agree to a 40 per cent cut in emissions by 2020 at the ongoing United Nations climate change negotiations in Copenhagen, Denmark.

The insurers said that these steps are crucial to limit the risk of exceeding a 2°C temperature rise, which they said would not only be catastrophic to global economy but to the insurance industry as a whole.

ClimateWise wants the negotiators to reach a deal that is clear on the financing package that developing counterparts will get to help them tackle climate change.

It wants both developing and developed countries to agree and commit to implement plans to systematically reduce related risks and disasters.

Insurance industry in Africa has previously voiced similar concerns, saying there is a likelihood that too many claims may result from some climate change-induced conditions.

Moses Banda, the CEO of MicroEnsure in Kenya, said insurers should start build adequate data to help them develop products that will be relevant to warming risks.

Continuous research

“What is required is good continuous research to ensure the data available is adequate and relevant,” he said.

Such claims may result from buildings damaged by floods, crops and property swept by floods and livestock that die from drought.

However, insurers say they are very well placed to fulfil the roles of managing the associated risks through geographical, regional and economic sector risk modelling or advising on the efficacy of reduction measures to help governments understand, respond to and manage the impacts of climate woes.