Even small increases in the intensity of major storms couldincrease damage costs by at least two-thirds by the end of thecentury, according to the Association of British Insurers. The mostextreme storms could become even more destructive, ABI warned,making insurance markets more volatile, as the cost of capitalrequired to cover such events increases.

Few business sectors have attempted to assess the practicalimplications of climate change for their industry and theircustomers, noted John Parker, Head of General Insurance for theABI, in explaining why ABI commissioned the study. “Insurance is inthe front line of climate change,” he said. “It is insurancecompanies that will have the responsibility of dealing with many ofits consequences. And it is insurers who must be equipped toanalyze the new risks that flow from climate change, and to helpcustomers to manage these risks.”

By publicizing the results of the collaborative study, theinsurance industry is communicating the potential level of futurerisk arising from climate change, enabling governments, businesses,and individuals to make rational decisions on whether and how toavoid these costs.