Climate change deniers hold steadfastly to their belief that human activity isn’t accelerating global warming and climate change. The world’s insurers aren’t waiting around for some universal consensus. Having seen, and in many cases paid compensation for, the damages caused by increased extreme weather events have been having around the globe, they’re taking action both on the asset and liability sides of their balances sheets.
Total insured losses from natural catastrophes in the US in 2011 totaled $35.9 billion, more than 50% above the average loss from 2000 to year-end 2010 of $23.8 billion in constant 2011 dollars. That’s the 5th highest on record, according to a January 4, 2011 webinar on 2011 global natural catastrophes hosted by Munich Re and the Insurance Information Institute (III).
2011: A Year of Record Natural Catastrophes, and Insured Losses
Significant extreme weather events affecting the US in 2011 included a very active thunderstorm (tornado-hail) season, with insured losses of $35.9 billion more than doubling the previous record, and Hurricane Irene, which caused major flooding in the northeastern US. At 820 globally, the number of natural catastrophes was in line with the 10-year 2000-2010 average of 790, though insured losses hit a record high $105 billion. Japan’s Fukushima disaster accounted for 47% of losses due to earthquakes.
One instance of the rising worldwide trend in extreme weather events, 2011 was a record year for federal disasters in Connecticut, the Hartford Courant reported. Three federal disasters were declared in the state last year – for a snowstorm in January 2011, Tropical Storm Irene and the late October Winter Storm Alfred that brought down the state’s power lines. Connecticut had never suffered more than one federally declared disaster previously.
At 99, federal disasters also hit a record. The Courant notes that Munich Re and III’s latest report states that the number of natural catastrophes worldwide more than doubled from an average of 356 in the early 1980s to an average 894 during the last five years.
Insurers Taking Action on Climate Change
Not having the luxury of sitting idly by and not being affected by extreme weather events and climate changes, leading insurers are actively working to protect their interests, which just happen to coincide with the well-being and comfort of the many millions of individuals, properties and businesses their policies cover.
In terms of assets, insurers are working to enhance and foster climate change awareness, prevention, mitigation and protection efforts for homes, commercial properties, land and natural resources. On the liability side, they’re working with clients to develop climate change risk management models that include ways of avoiding environmental harm and damage. Failure to protect against or disclose such harm may lead to lawsuits, according to the Insurance Information Institute’s October 2011 update on climate change issues.
Photo courtesy KNS Financial