Reinsurance (November 01, 2009)

LOOK FOR CLIMATE CHANGE EXCLUSIONS TO APPEAR IN LIABILITY POLICIES IN THE NEAR FUTURE: ENVIRONMENTAL RISK ADVISOR

Risks related to climate change are so expansive as to be uninsurable. It is therefore likely that climate change exclusions will be written into general commercial and excess liability insurance policies in the near future, predicts Rodney Taylor, managing director of Aon Environmental Services Group.

Taylor spoke at Environmental Risks, a seminar organized by The ARC Group Canada and held in Toronto.

“All of the kinds of major insurance policies, and that includes liability polices, have no specific exclusions for climate change or global warming,” Taylor noted, adding that the only type of exclusion that comes close is a pollution exclusion.

“I anticipate, and I have actually had policies now issued with, a specific climate/change global warming exclusion…

“I think you’re going to see that happening at a reinsurance level first, from [reinsurers] like Munich Re, Swiss Re — people who have been studying this for a long time. They are going to start limiting what they provide for coverage and that will trickle down into the direct sales for primary insurance. That I think is going to happen sooner rather than later.”