A Zurich Financial Services report on climate change identifies a key role for insurers in dealing with the “exceptional complexity” of climate risk.

The white paper identifies demand for sustainable, market-friendly incentives for adaptation and mitigation to climate change risks.

“These climate-related changes may possibly lead to threats to human health, costly disruptions of economic activity, irreversible damage to natural ecosystems and other consequences,” the report said.

It claims insurers are ideally placed to manage the “balance between risk exposure and financial stability”.

Zurich recommends that any public policy on climate change must continue to allow insurers to use their “core skills to send risk-based price signals and manage risks”.

Public policy-makers must properly assign property rights to enable markets to function and close the “global governance gap” to resolve conflicting jurisdictional laws.

Where property rights cannot be assigned to public goods, Zurich says governments must align incentives to reflect climate policy goals.

A Zurich Australia spokesman told insuranceNEWS.com.au the report will be forwarded to the Federal Government.