The financial crisis will take its toll on Australia but the insurance industry’s focus needs to be on climate change, according to the Head of Swiss Re Australia and NZ, Russell Higginbotham.

He told last week’s Insurance Summit that when the market corrects itself “it happens much, much faster,” he said. “But the insurance industry is in a good position. We are big enough and ugly enough to be able to redeploy capital.”

Mr Higginbotham says while it could take from two to 10 years for economies to recover from the financial crisis, it is only a short-term risk. He says much more focus is needed on climate change, with Swiss Re doing its best to reduce emissions through its “reduce and gain” program.

“Climate change is like a supertanker heading towards the rocks – very slow but if it doesn’t change course it’s all over,” he said.

Mr Higginbotham also says that as most of the world’s economies take hits from the global financial crisis, insurers will have to be careful about their investment choices. He predicts South Korea and Taiwan will be very attractive markets.

But he is concerned that the number of mergers and acquisitions happening in Australia at the moment could significantly affect the industry.

“The larger players may lack the knowledge and expertise to take over some of these niche players but have the financial means to do so,” he said. “This can be a problem.”