Even small increases in the intensity of major storms could increase damage costs by at least two-thirds by the end of the century, according to the Association of British Insurers. The most extreme storms could become even more destructive, ABI warned, making insurance markets more volatile, as the cost of capital required to cover such events increases.
Few business sectors have attempted to assess the practical implications of climate change for their industry and their customers, noted John Parker, Head of General Insurance for the ABI, in explaining why ABI commissioned the study. “Insurance is in the front line of climate change,” he said. “It is insurance companies that will have the responsibility of dealing with many of its consequences. And it is insurers who must be equipped to analyze the new risks that flow from climate change, and to help customers to manage these risks.”
By publicizing the results of the collaborative study, the insurance industry is communicating the potential level of future risk arising from climate change, enabling governments, businesses, and individuals to make rational decisions on whether and how to avoid these costs.
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