Assetsure News 14th September 2007
Insurance and Climate Change
The Co-operative insurance society is the latest insurance company to post losses following this summer’s bought of bad weather. It has stated that flood claims have cost it in excess of £55 million pounds. The Cop-Op insurers some 950,000 households and following the bad weather, handled more than 5000 extra claims. This week the Association of British Insurers warned that insurance companies must cut their own greenhouse gas emissions and to help and advise their customers to do the same. They believe that if this warning is not heed, claims from floods could rise dramatically in the coming years with grave consequences for the UK insurance industry. Among the suggestions from the ABI is that insurers should share more data about weather homeowner insurance claims and it's own chief executives should undertake less travel to set a good example to staff, shareholders and policyholders. Further the association also urged insurance companies to consider the implications of climate change for company performance and shareholder value and to incorporate this information in to investment decision making.
Insurance companies are amongst the hardest hit by climate related insurance claims, storms are becoming more severe and this years bad weather is likely to losses in excess of 3 billion. One of the recently introduced initiatives to help reduce “tomorrows” risk was championed by Prince Charles and a number of UK insurers have signed up already. This week the Prince of Wales stated “This is just the beginning of the process of real change. Time is a luxury we do not have and I urge companies both at home and internationally to sign the Climate Wise principles and take the necessary action." The insurers have all agreed to sign up to a set of principles and state by that working individually and collectively they aim to reduce the economy’s and society’s long-term risk from climate change. Further within the confines of the competitive insurance market place they will do the following:-
1. Take a lead in Risk Analysis
2. Support climate awareness amongst customers
3. Reduce the environmental impact of their business
4. Inform public policy making
5. Incorporate climate change in to investment strategies
6. Report and be accountable.
This would seem an admirable start and is one of many initiatives that are set to help tackle the real risk of climate change. However, it must be remembered that the United Kingdom are not solely responsible for greenhouse gases and it's effects, global warming is global problem and it will be of absolutely no use if we in the United Kingdom do all we can to cut down on greenhouse gas emissions and save energy if everyone else in the world carriers on regardless. Adopting a parochial attitude to this global problem is useless, it needs all countries and all industries to sign up to initiatives and heavy investment in developing more eco friendly fuels.