Munich Re Talks Climate Change and Effect on Rising Insurance Costs
The world’s second-largest reinsurance group, Munich Re, joined calls on the world’s politicians and governments to take measures to combat climate change as it reported that the cost of natural disasters had doubled this year to just under $30 billion (£15 billion).
Although it said that there had been no “mega-catastrophes” in 2007, such disasters were on the cards, caused, at least in part, by climate change.
Torsten Jeworrek, a member of the board at Munich Re, said: “The trend in respect of weather extremes shows that climate change is already taking effect and that much more such extremes are to be expected in the future. We should not be misled by the absence of mega-catastrophes in 2007.” He called on the international community to take swift action on the issue.
In Britain insurers are still counting the costs of torrential downpours in June and July. The final insurance bill has been estimated at £3 billion. Such flood damage has pushed up insurance costs dramatically in the UK, with some of big insurers threatening to withhold cover for the riskiest areas. Munich Re said that premium costs were bound to rise as the insurance market takes account of fresh risks.
Munich Re’s annual round-up of insurance losses comes a week after Swiss Re, the world’s largest reinsurer, estimated that catastrophe losses had reached $25 billion this year.
There were 950 natural catastrophes this year, the highest since Munich Re began to keep records in 1974. Despite a total economic loss of $75 billion, the disasters still caused far less damage than 2006, when the combined effects of severe hurricanes, such as Rita and Katrina, caused losses estimated at a record $220 billion, with almost $100 billion of that paid out by insurers.
Munich Re noted that the worst human catastrophes had hit developing economies. More than 11,000 people died in Asia in natural disasters, about 3,300 in Bangladesh, hit last month by Cyclone Sidr. In Europe, Storm Kyrill caused the greatest chaos, bringing windspeeds of up to 200 km/hour in January, reaching from the mid-Atlantic as far east as Poland and Austria. Kyrill caused about $10 billion of economic damage, according to Munich Re.
Dr Jeworrek gave warning that weather-related losses would rise, pushing up premium costs and acting as a drain on government spending on infrastructure.
Published on December 28, 2007
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