Nick Starling says major change is needed in planning decisions to deal with climate change risk
Nick Starling, director of general insurance at the ABI, highlighted how the insurance industry can help in the fight against the threat of climate change.
"The insurance industry can do two extremely valuable things: it can measure what has happened and it can predict into the future, Starling said.
"We don't take a position on the science of climate change, but we can see what's out there and advise accordingly, and that's a very powerful position to be in."
Starling noted how costs are doubling each decade. Since 1990, the insured costs each year have been $16bn a year on average. 2004 was the costliest year on record - $40bn in insured losses - and that was the costliest until 2005 came along, and the figure is $83bn for last year.
"It's undoubtedly true that the climate is changing and it's changing around us."
In its work on the issue of climatic change, the ABI took the inter-governmental panel on climate change models for weather development and put them into the insurance models, with interesting results.
The ABI predicted what would happen by 2080 under high emissions scenarios looking at three areas: hurricanes in North America, typhoons in Japan and European windstorms.
"What was interesting in all these cases is that the actual increase in wind speeds was round about 6% and by 2080 the climate change models predicted greater severity and greater volatility."
But the onward impact was much greater. "We calculated that average costs would go up by two third to three quarters, to $27bn a year, and the cost of extreme events would similarly rise very considerably, in the case of the North American hurricanes, by three quarters, to $250bn a year, and very similar figures for typhoons in Japan."
But even these scenarios were incomplete. It didn't look at flooding or at socio-economic development.
To stop this bleak view from coming reality, planning is key.
"In order to avoid future damage there needs to be step change in the consideration of how planning decisions are taken, to take account of future extreme weather events," says Starling.
On top of this it is necessary to build the proper infrastructure.
"We saw from New Orleans just what happens when you don't look after the infrastructure in terms of defences."
And make buildings more resilient."You can improve building codes for a start and just as a small increase in wind speed leads to a knock-on effect in terms of damage, quite relatively small increases in design codes can produce huge savings in terms of damage."
Insurance, says Starling, is extremely important in this whole debate.
"We don't have an agenda other than the importance of managing existing risks and reducing future risks.
"And an extraordinarily good driver to any change in behaviour, is costs, and of course the more that insurance can relate costs to what is going to happen, the more it can drive people to amend their behaviour and reduce the risks."
