While some people are debating the existence of climate change, reinsurers aren't taking any chances. They are doing a tremendous amount of research and modeling and are busy creating action plans.

The industry has invested millions in research and is looking at alternative solutions to reducing carbon emissions, such as solar and wind power.

Munich Re, in a press report, “Weather Extremes, Climate Change, Cancun 2010,” marking the 16th World Climate Summit in Cancun, Mexico, which started today, said climate change “is a fact, and it is almost entirely made by man.”

Munich Re noted that it has been analyzing natural hazards and natural hazard losses for more than 35 years. For this purpose, the company said it has set up the most comprehensive natural catastrophe database in the world—currently comprising more than 28,000 events.

According to its research, the company said the number of major weather-related natural catastrophes has tripled since 1980, as has the number of floods. Windstorms have more than doubled in number. The first nine months of 2010 saw the second highest number of claims from natural hazard events since 1980.

But Munich Re obviously sees some opportunity here. With climate change in mind, the company has devised a number of coverages to reduce the risks for investors in renewable energies—making such investments feasible.

The spectrum ranges from traditional coverage for industrial facilities to complex solutions, such as coverage against a lack of wind or sunshine and performance guarantee covers for manufacturers in the technology sector that reduce the risks for investors.

The company is looking to increase its premium income substantially by 2020.Munich Re also cited Desertec, a project using solar energy or wind power that will initially focus on the Middle East/North Africa region (MENA), taking advantage of vast expanses of desert there.

Electricity created by solar and wind power is to be transmitted over long distances using extremely low-loss high-voltage direct current technology (HVDC).

The Desertec Foundation and Munich Re launched Dii GmbH, an industrial initiative, on Oct. 30, 2009. Dii now has 18 shareholders and 32 partners. Its goal is ambitious–to develop conditions for implementation of the desert power project which, in the long term, is to supply a considerable portion of electricity needed by the MENA region as well as 15 percent of Europe's electricity.

These are ambitious goals, but companies like Munich Re have the foresight and the means to make them happen.

Now all we need is for some ingenious organization to figure out a way to utilize all the garbage we are piling up daily on our planet—a wasted resource in my opinion.

There are mountains of materials creating methane gas, an untapped alternate fuel source. They also contain precious metals. These could be used in computers, cell phones and other items yet to be invented.

All of these potentially valuable materials are going to waste needlessly, as well as seeping into our water table and causing other problems. But I believe the ingenuity of some will uncover a virtual gold mine in our dump sites.

But all in time–something else that may be in short supply if we're not careful.

Special Reports /

Reinsurers Investing In Climate Change

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