Insurers should model for flooding, drought as a result of global warming

The insurance industry should start planning and modeling for a higher level of losses across the world by the middle of this century, as sea levels rise and large portions of polar ice sheets begin to melt, according to a report by Lloyds of London.In its report, 360 Risk Project, posted online, Lloyds warns that global warming is not only changing the average climate, but will also make it more erratic, which should be of concern to the insurance industry.The report notes that is global warming modifies Gulf Stream currents, Northern European coastal sea levels could rise by up to a metre over a few decades. Also, the report says, Greenlands ice sheet, previously thought to be stable, is now showing signs of rapid melt, and commentators are beginning to speculate that the resulting injections of cold freshwater into the North Atlantic could impact upon the climate of Europe and North America.Given that flooding currently accounts for half of all the deaths caused by natural disasters, and that the magnitude of flooding is expected to increase within our lifetime, the report recommends that society needs to improve its flood management ability, and the insurance industry should factor the upward trends into its modeling.The report also notes that some climate models predict an almost permanent El Nino within our lifetime (though not all agree), the result of which might be extended drought conditions in Southern Africa and the drying of the Amazon.