Swiss Re, Attending Copenhagen Conference, Urges Quick Action

Swiss Re said it is pushing for a swift transition from COP 15 discussions to practical implementation of adaptation measures in the near term with the objective of reducing climate-related losses and building economic resilience in the countries and regions most at risk.

The firm noted that a recent Economics of Climate Adaptation (ECA) study has concluded that annual losses due to climate risks could amount to up to 19 percent of a developing country's gross domestic production by 2030.

But, it found that action on climate adaptation can significantly reduce economic losses from climate risks by between 40- and 65 percent, thereby boosting local economic resilience.

Andreas Spiegel, Swiss Re's senior climate change advisor, said, "Our societies urgently need to become more resilient by adapting to severe weather events. For example, current scientific estimates suggest that the sea level will rise between a half and one-and-a-half meters before 2100. Peak surge height could increase by 50 percent, meaning that a sea-level surge previously seen only once in 1,000 years could now appear on average every 30 years."

Since 1970, Mr. Spiegel noted, "36 of the 40 worst insurance losses have been weather related. This does not even take account of developing countries where over 90 percent of such events are not insured."

"While the insurance industry is an important contributor to the absorption of volatile risk, it cannot tackle the challenges of climate change alone. To address this, public-private partnerships will be indispensable."

David Bresch, Swiss Re head of sustainability and emerging risks, said that to absorb highly volatile losses, the company offers alternative forms of risk transfer in addition to traditional insurance as well as "concrete guidance, based on our expertise and experience as a global reinsurer, for how societies can respond to the climate adaptation challenges."

Swiss Re said in collaboration with partners including McKinsey, the Rockefeller Foundation and GEF, the reinsurer has developed an adaptation framework designed to give local decision-makers the tools to start costing and planning for climate adaptation.

I.I.I. said more than 600 innovative, eco-friendly products and services are now offered by 244 insurers, reinsurers, brokers and insurance organizations in 29 states; 37 percent of those activities come from U.S. companies.

Twenty-two companies now offer 39 products and services specifically designed for new green buildings and green upgrades for existing buildings, either following a loss or in the course of normal renovations, said I.I.I.

"Insurers have become good corporate citizens by creating important new green insurance products and services to reflect changes in society," said I.I.I. Vice President Loretta Worters.

I.I.I. noted that one insurer has introduced the world's first-ever insurance for humanitarian emergencies, which was purchased by the World Food Programme.

That coverage tracks rainfall amounts and patterns and pays claims well in advance of when post-event relief would be distributed.

"By mobilizing aid faster than would be possible by traditional approaches, this product reduces human suffering and the overall costs of responding to humanitarian crises," noted Ms. Worters.

Among other insurer green product offerings mentioned by I.I.I.:

o Pay as You Drive (PAYD) insurance programs rewarding policyholders who drive fewer miles with discounts.

o Premium discounts up to 10 percent for those who drive hybrid vehicles.

o Green homeowners and commercial property policies with discounts for homes meeting stringent efficiency and sustainability standards.

o Homeowners coverage that replaces/rebuilds after a loss with more eco-friendly materials including some that pay homeowners extra if they replace old kilowatt-hungry appliances with energy-saving devices and recycle debris rather than send destroyed materials straight to a landfill.

o For homeowners generating their own geothermal, solar or wind power and that sell any surplus energy back to the local power grid, policies covering both income lost when there is a power outage caused by a covered peril and the extra expense to the homeowner of temporarily buying electricity from another source. Policies generally cover the cost of getting back on line, such as utility charges for inspection and reconnection.

o Policies allowing building owners to replace standard systems and materials with green ones, such as energy-efficient electrical equipment and interior lighting, water-conserving plumbing and nontoxic and low-odor paints and carpeting, after a loss.

o With a total loss, a policy will often cover the cost of rebuilding as a green-certified building. This coverage may also pay for engineering inspections of heating, ventilation, air-conditioning systems, building recertification fees, replacement of vegetative- or plant-covered roofs and debris recycling. Some cover the income lost and costs incurred when alternative-energy generating equipment is damaged.