The industry must change the way it views and prices risk amid rising sea levels and other consequences of global warming, according to the Insurance Council of New Zealand (ICNZ).

It says while insurance and risk are still not widely understood, the industry plays a vital role in climate change mitigation.

“Are businesses fully accounting for the future risk of climate change?” CEO Tim Grafton asked during a speech at the recent Australia-New Zealand Climate Change & Business conference in Auckland.

“To the extent this is not happening, then globally we are underestimating climate change risks, leading to overinvestment in sectors most vulnerable to the impact.

“We must assess future risks and decide what is tolerable.

“That is as much a community conversation as one for risk analysts. Then we can calculate the cost of what needs to be done.”

Mr Grafton says the industry can also support public sector mitigation efforts.

“Insurers and… their industry bodies such as ICNZ can engage with central and local governments to encourage planning and adaptation measures to reduce the risks of climate change by taking a long-term view of risk and the likely consequences of doing nothing,” he told insuranceNEWS.com.au.

“Other stakeholders such as banks also have a deep interest in de-risking the future, so insurers can work with those to address that common purpose.

“Insurers are also significant investors globally, so they have a role to play in the inevitable transition to a low-carbon economy, as well as a risk to manage with respect to investments that are linked to high carbon-use operations.”