The reality of climate change can no longer be ignored by U.S. policymakers, according to the chairman of Lloyd's of London, who warned that coordinated action needs to be taken by government and business to save future generations.

"We cannot risk being in denial on catastrophe trends. We urgently need a radical rethinking of public policy, and to build the facts into future planning," Lord Peter Levene said in a recent speech in Washington, D.C., to the World Affairs Council.

The number of natural catastrophes has doubled since the 1960s, while at the same time, insured losses have increased nearly sevenfold--most of them weather related, he noted. The worst insurance year on record came in 2005, with total global insurance claims of $83 billion--with over 80 percent from U.S. hurricanes, he added.

"Over the coming years, with warmer sea surface temperatures making landfall more likely, particularly destructive storms are a likely scenario," said Lord Levene. "We can expect the storm season to lengthen, and we will be at risk over a wider geographical area than ever before."

There is a growing acknowledgement among insurers that global climate change is playing an adverse role, according to Lord Levene. "We need to take coordinated action on climate change," he urged.

However, he was critical of current U.S. policy, holding government, the business community and individual citizens responsible for not taking the prospects of global warming seriously.

"Society must make some tough decisions and be prepared to change its behavior," he said. "Here in Washington, does the will and the commitment exist to encourage that process?"

Changing subjects, he was equally critical of talk that would punish the profitability of the insurance industry with a windfall tax, suppress rates, or "otherwise rein-in a so-called 'greedy' industry."

The insurance industry, by its cyclical nature, enjoys short periods of profitability between long periods of losses, which act as a restorative period to allow the industry to catch up with its claims, the Lloyd's chairman noted.

Such talk about containing industry profitability in the face of potentially prolonged and severe losses from future catastrophes could profoundly damage the industry's ability to provide capital for rebuilding after a major disaster, he warned.

"Ultimately," he said, "we cannot put the financial health of the insurance industry--and therefore the consumers they represent--at risk due to the demands of politicians whose views may be clouded by the need to attract votes."

Lord Levene said Lloyd's is taking steps to address climate change by investing in new scientific research in the United States and the United Kingdom. Lloyd's also insures new "green technology," including a third of insurance for waste-to-energy recycling plants and a quarter of the world's wind farms, he noted.

"There is an important role which business can play, and there is commercial benefit to be gained from doing so," said Lord Levene.

With the insured value of properties in U.S. coastal areas doubling over the last decade to more than $7 trillion, Lord Levene said insurers must push for action to limit the potential threat of climate change.

"Two years after [Hurricane] Katrina, and two years away from a national [U.S.] election, where's the public debate on catastrophe trends?" he challenged, noting that Lloyd's has recently developed a $100 billion loss scenario for a major windstorm hitting the U.S. Gulf or East Coast.

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