Lloyd's has today issued its latest report on the potential/inevitable impact of climate change on the insurance industry.
Following on from its original climate related report “Adapt or Bust”, “Rapid Climate Change” draws on the expertise of four leading UK scientists and explores what climate change could mean in our lifetime in four areas relevant to the insurance industry: sea level rise, melting icecaps, flood and drought.
Commenting on the importance for the industry of having access to accurate information on climate change developments, Trevor Maynard, manager, emerging risks, Lloyd's, said: “It is vital that the insurance community has an accurate and balanced understanding which reflects the latest thinking on climate change but which avoids sensationalism.”
The report raises the following five issues:
1. The insurance industry should start planning and modelling now for a higher level of losses across the world by the middle of the century as both the severity and frequency of weather events increase.
2. Sea levels will rise faster this century than last century, and the prospect of a rapid rise in sea level within our lifetime is increasing.
3. Evidence is building to suggest that large portions of ice sheets will melt in this century, speeding sea level rise further and increasing uncertainty for coastal communities about the speed and impact of climate change.
4. Floods currently account for half of all deaths caused by natural disasters, but the frequency and magnitude of flooding is set to increase within our lifetime.
5. Drought patterns are already changing in a way that is consistent with a warming world, and this is expected to continue during our lifetime.
“More uncertainty means more risk,” said Maynard, commenting on the discrepancies which exist between global climate change models, “and calls for a fresh and flexible approach to management of climate related risk, in our view.”
