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The Geneva Association Launches A Major Research Report on Insurance and Climate Change

Source: Geneva Association Information Newsletter

Posted on 06 Jul 2009

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The Geneva Association launches a major new research report, "The Insurance Industry and Climate Change -- Contribution to the Global Debate". The report was drafted by senior insurance executives and international climate change experts.

Main findings and conclusions of the report:

•Unmitigated climate change may have significant adverse effects on the long-term development of the world economy, especially in developing countries.

•The insurance industry is uniquely positioned to provide specialized services for countries and businesses facing climate risks worldwide.

•The insurance industry is willing and able to effectively support the transition to a low-carbon economy.

•The climate challenge goes beyond mitigation action to reduce GHG emissions. In addition, effective adaptation strategies are needed as climate change will evolve over decades given the inertia of the climate system.

•The upwards trend in insured losses is largely due to socio-economic factors such as value concentrations in coastal areas. This trend could accelerate as a result of climate change, primarily through changing weather patterns. It also depends on the willingness and success of insurance companies in providing coverage for their clients.

•According to the United Nations, global adaptation costs per year by 2030 will amount to US$50-170bn, from which US$30-70bn will be required in developing countries.

•The insurance industry is keen to establish a stronger climate partnership with governments. Effective mitigation and adaptation strategies require appropriate incentives from policy-makers.

The Kyoto Statement, signed by over 50 insurance and reinsurance CEOs

Against the backdrop of the research report, the CEO members of The Geneva Association have issued an unprecedented industry statement which outlines their assessment of climate change and its implications. The Statement was agreed upon during The Geneva Association’s last General Assembly in Kyoto (27-30 May 2009).

The Statement, signed by more than 50 industry leaders, reaffirms the industry’s commitment to support its customers in mitigating and adapting to climate change through enhanced research, innovative products and focused investments in low-carbon energy projects.

In addition, industry CEOs offer their support to policymakers, e.g. through active cooperation in implementing building codes, sensitizing customers to climate change risk and funding relevant research.

In view of the forthcoming United Nations’ Climate Change Conference (COP15), the CEOs emphasize that insurance is uniquely positioned to provide specialized services for countries and businesses facing climate risks and, therefore, should be a strong complementary mechanism in any comprehensive framework of adaptation.

Michael Butt, Co-Chair of the research working group and Chairman, AXIS Capital, commented: “Climate change is happening and calls for concerted and meaningful mitigation and adaptation measures. Against this backdrop, the leaders of the global insurance industry have put forward this powerful research report, specifically outlining how their companies can support the transition to a more sustainable, low-carbon economy.”

Kunio Ishihara, Co-Chair of the working group and Chairman, Tokio Marine & Nichido Fire, said: “The Kyoto statement has drawn an unprecedented level of support from the CEOs of the world's largest insurance and reinsurance companies. As such, it makes it very clear to all our stakeholders that the industry is a vital force to reckon with when tackling the challenge of climate change. I am also very pleased that the Kyoto Statement is backed up by CEOs of large companies from the emerging insurance markets, as these countries will bear the brunt of climate change.”

Patrick M. Liedtke, Secretary General and Managing Director of The Geneva Association, added: “The Geneva Association offers unique platforms to pool the knowledge and expertise of the insurance sector. On that basis, we created an opportunity for insurers and reinsurers to join their forces to deal with arguably the most threatening and expensive set of long-term risks to our economies: climate change. The Geneva Association helps to prioritize this issue for the industry, stimulates research and special projects, and works towards advancing insurance solutions and risk discovery mechanisms for the benefit of the industry and society at large.”