Tackling climate change
The global credit crisis is dominating the industry’s attention at present, but lurking in the background is an issue that isn’t going to go away: climate change.
Professor Ross Garnaut’s final report on climate change was released by the Federal Government on the same day as the US stock market crashed. Last week Zurich Australia released its own commissioned findings on climate change from consulting firm Climate Risk, and the message is stark.
The Zurich report says climate change is one of the most serious and complex risks confronting the insurance industry.
It says hazards and risks resulting from climate change will increase insurers’ losses, erode their markets and even test their regulatory compliance.
And it says relatively few insurers have made much progress in readying their business lines, educating their distributors or customers about climate change risks, and finding adaptation options.
It found that only one in 10 insurers globally are working to understand the mechanics of climate change. Only one in three are offering innovative products and services that address climate change. And only four in 10 have disclosed climate-related risks to shareholders in their annual reports.
It’s not a pretty picture, and one the Insurance Council of Australia finds some difficulty in commenting on. ICA says it does not collect data specific to the comments in Zurich’s white paper, so it can neither confirm nor deny the accuracy of their statement.
ICA says its members – which include Zurich – are committed to continually developing innovative products with the aim of providing ever-improving insurance coverage for Australian consumers. ICA GM of Communications Paul Giles says this is evidenced by ICA’s work on the National Flood Information Database project.
And he says the industry’s efforts to create wider availability of flood coverage have resulted in 32% of policies now offering flood coverage, as opposed to just 8% in 2006.
But the co-author of the Zurich report, Climate Risk Director Karl Mallon, says there’s still a lot more to be done.
Dr Mallon “does not concur” with ICA’s response to the Garnaut report that “individuals and business should be responsible for individual decisions relating to increasing their own resilience to extreme weather events, where compliance by an authority is not required”.
He says the industry’s experience is very important, “considering society pays the global insurance industry 8% of global GDP to manage risk”.
While the Zurich paper provides a platform for dialogue between government, insurers, and the industry, he says something “has been lacking”.
But he also says that while the report discusses the need for insurers to do something about climate change, there is also a need industry co-ordination.
Changes to climate change are very difficult for governments, industry bodies, insurers and individuals to do independently. “At best what they can do is try to transfer the risks on to someone else.”
But if insurers co-ordinate their efforts there would be a chance to reduce those risks, he says.
Professor Ross Garnaut’s final report on climate change was released by the Federal Government on the same day as the US stock market crashed. Last week Zurich Australia released its own commissioned findings on climate change from consulting firm Climate Risk, and the message is stark.
The Zurich report says climate change is one of the most serious and complex risks confronting the insurance industry.
It says hazards and risks resulting from climate change will increase insurers’ losses, erode their markets and even test their regulatory compliance.
And it says relatively few insurers have made much progress in readying their business lines, educating their distributors or customers about climate change risks, and finding adaptation options.
It found that only one in 10 insurers globally are working to understand the mechanics of climate change. Only one in three are offering innovative products and services that address climate change. And only four in 10 have disclosed climate-related risks to shareholders in their annual reports.
It’s not a pretty picture, and one the Insurance Council of Australia finds some difficulty in commenting on. ICA says it does not collect data specific to the comments in Zurich’s white paper, so it can neither confirm nor deny the accuracy of their statement.
ICA says its members – which include Zurich – are committed to continually developing innovative products with the aim of providing ever-improving insurance coverage for Australian consumers. ICA GM of Communications Paul Giles says this is evidenced by ICA’s work on the National Flood Information Database project.
And he says the industry’s efforts to create wider availability of flood coverage have resulted in 32% of policies now offering flood coverage, as opposed to just 8% in 2006.
But the co-author of the Zurich report, Climate Risk Director Karl Mallon, says there’s still a lot more to be done.
Dr Mallon “does not concur” with ICA’s response to the Garnaut report that “individuals and business should be responsible for individual decisions relating to increasing their own resilience to extreme weather events, where compliance by an authority is not required”.
He says the industry’s experience is very important, “considering society pays the global insurance industry 8% of global GDP to manage risk”.
While the Zurich paper provides a platform for dialogue between government, insurers, and the industry, he says something “has been lacking”.
But he also says that while the report discusses the need for insurers to do something about climate change, there is also a need industry co-ordination.
Changes to climate change are very difficult for governments, industry bodies, insurers and individuals to do independently. “At best what they can do is try to transfer the risks on to someone else.”
But if insurers co-ordinate their efforts there would be a chance to reduce those risks, he says.