Lloyd’s: insurers must address climate change

Insurers need to address global climate change because of the growing cost of extreme natural disasters, advised Lloyd’s of London chairman Lord Peter Levene.

“We cannot risk being in denial on catastrophe trends,” Levene said recently in a speech to the World Affairs Council. “We urgently need a radical rethink of public policy, and to build the facts into future planning.”

According to Levene, the number of catastrophes has doubled since the 1960s. In addition, insured losses have increased nearly seven-fold, most of them being weather-related.

The worst year on record came in 2005, when global insurance claims totaled US$83 billion. Eighty per cent of these damages resulted from U.S. hurricanes. “Over the coming years, with warmer sea surface temperatures making landfall more likely, particularly destructive storms are a likely scenario,” Levene said. “We can expect the storm season to lengthen, and we will be at risk over a wider geographical area than ever before.”

A growing number of insurers acknowledge that global climate change is playing an adverse role, Levene says.