Globally, big reinsurers are calling for governments to take action to mitigate climate risks, in particular the risks faced by cities. Labor’s Senator Alex Gallacher has pointed out that Swiss Re, probably the largest reinsurer in the world, says in its mission statement that ‘climate change is in its DNA’.
The money people of the world, the people who have been reinsuring risk for centuries, think that climate change is real, climate change is here—’it’s in our DNA’—and they underwrite the risks which have been clearly identified.
There is a Global Insurance Industry Statement and other information at Climate Wise, the website of the insurance industry leadership group on climate risk. Big firms like Price Waterhouse Coopers participate in and endorse Climate Wise.
A good compilation of information and issues on climate change and insurance and financial services is available from the US Department of Energy’s Lawrence Berkeley National Lab.
Here in Australia the Insurance Council of Australia has noted that
The coastal risks of storm surge, coastal erosion and gradual sea level rise are excluded by many general insurance policies in Australia.
The National Climate Change Adaptation Research Facility has noted that
Local governments play a critical front-line role in Australia’s response to the impacts of climate change and sea-level rise.
In South Australia, as far back as 2008 pressure from re-insurers led the Local Government Association of SA Mutual Liability Scheme (LGA MLS), insurers to the local government sector, to require every council state-wide to participate in a climate change risk assessment process.
The Western Australian Local Government Insurance Service has adopted a framework and offers services to WA local governments for climate change adaptation planning.
Here’s what the ABA said in 2007:
Climate change has considerable economic, social, environmental and business risk. Continuing uncertainty is disrupting the efficiency of existing markets as well as creating difficulties with regard to financing terms and investment decisions. Australia needs leadership and early action to provide business investment, operational and market certainty. It is important for Australia to take action now and minimise the impacts of uncertainty.
Climate change also presents considerable opportunity. Trading, product creation and ancillary services including risk consulting, funds management, legal and accounting should be developed as export services regionally and globally. It is important for Australia to take action now and take advantage of the opportunity to position itself as a carbon hub within the Asia Pacific region.