International and UK insurance groups have signed a new treaty pledging to pool resources in understanding and combating climate change.

The ClimateWise group of insurance companies, launched in London last week under the eye of Prince Charles, includes 38 companies and organisations supporting research into climate change, raising awareness and changing business practices to reduce environmental footprints.

The group will also study new investments with environmental principles and take a greater role in public policy debate.

Lloyd's finance, risk management and operations director Luke Savage says the market will work with the Association of British Insurers and international groups to improve understanding of climate change.

Munich Re - one of the signatories to the treaty - says insurers are at the sharp end of climate change risk.

"As climate change progresses, the insurance industry must reassess its exposure to risk, but, with the support of its expert knowledge, it is well-equipped to use this as a basis for developing new opportunities too," board member Torsten Jeworrek said.

"We see openings for substantial additional business in technologies like the booming sector of renewable energy and in the flexibility mechanisms outlined in the Kyoto Protocol."