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ABC The Drum - Bookies buying into climate change race

"Munich Re has been dealing with climate change and its consequences and the scientific background since the 1970s, when there was no public debate on climate change," says Munich Re's Ernst Rauch, who heads the insurance giant's Corporate Climate Centre.

"As a risk-taker, we are somewhat like an early-warning system when it comes to changes in the risk field of natural catastrophes."

Mr Rauch's original expertise was in earthquakes, but following devastating losses for the insurance industry from a series of storms in the European winter of 1990, his area of responsibility shifted to the analysis and modelling of meteorological risks.

And the verdict?

"Climate change, we believe, is a fact."

Why?

His pockets are already hurting.

"Based on our own loss experience, climate change we believe is a fact. It triggers natural disasters, atmospheric natural disasters, and the number of these natural disasters worldwide has more than doubled since the 1980s, driven by atmospheric perils, not by earthquakes or volcanic eruptions," Mr Rauch said.

"If we look at the sheer number of losses from natural catastrophes worldwide since the 1980s, more than $US1,600 billion in losses have occured. Most of them were actually weather-related, not earthquakes, not geophysical events."

And he says the economic cost of these disasters, once you take out things like inflation and currency fluctuations, is increasing by 11 per cent a year.

So faced with these increasing losses, what are large insurers and reinsurers doing?

Well, they're putting up premiums of course.

That 11% then seem negated by scientific publications, amongst others one publication by... Munich Re.

ScienceDirect - Environmental Impact Assessment Review : Tropical cyclone losses in the USA and the impact of climate change -- A trend analysis based on data from a new approach to adjusting storm losses

Economic losses caused by tropical cyclones have increased dramatically. Historical changes in losses are a result of meteorological factors (changes in the incidence of severe cyclones, whether due to natural climate variability or as a result of human activity) and socio-economic factors (increased prosperity and a greater tendency for people to settle in exposed areas). This paper aims to isolate the socio-economic effects and ascertain the potential impact of climate change on this trend. Storm losses for the period 1950-2005 have been adjusted to the value of capital stock in 2005 so that any remaining trend cannot be ascribed to socio-economic developments. For this, we introduce a new approach to adjusting losses based on the change in capital stock at risk. Storm losses are mainly determined by the intensity of the storm and the material assets, such as property and infrastructure, located in the region affected. We therefore adjust the losses to exclude increases in the capital stock of the affected region. No trend is found for the period 1950-2005 as a whole. In the period 1971-2005, since the beginning of a trend towards increased intense cyclone activity, losses excluding socio-economic effects show an annual increase of 4% per annum. This increase must therefore be at least due to the impact of natural climate variability but, more likely than not, also due to anthropogenic forcings.
by Nomad on Mon Nov 1st, 2010 at 09:07:42 PM EST
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