Joachim Faber, a member of the Board of Management for Germany’s Allianz Group and CEO of its asset management arm, told interviewers on the company’s Website: “We expect climate change to influence the frequency and severity of natural catastrophes. This means, for example, more property damage which of course will affect our insurance business.”
Faber’s remarks followed the publication of a joint study by Allianz in cooperation with the WWF, entitled: “Climate Change & the Financial Sector: An Agenda for Action.” The report outlines specific steps for actions to better integrate risks from climate change into the insurance, banking and asset management business, and includes a pledge to grow investments in renewable energies by 300 to 500 million euros ($361 to $602 million) over the next five years.
“Climate change creates significant costs for the financial industry,” Faber noted. “In the interest of our clients and shareholders we are obligated to take these risks into account when making decisions on insurance underwriting, investments or lending credit.”
Allianz also foresees increasing potential losses from property damage claims, with a consequent rise in premiums “to cover the risks associated with climate change.” Andrew Torrance, CEO of Allianz Cornhill, the Group’s UK-based insurance subsidiary, noted: “We agree with scientists who say that while natural catastrophes can not be conclusively linked to climate change, the severity and frequency of natural disasters have increased as a result of a changing climate. For our insurance business, climate change is increasing the potential of property damage at a rate of 2 to 4 percent per year. In some cases this might result in property damage premium rises in some markets as insurers adjust their risk-based insurance cost models to reflect the increasing severity of climate change events.”
The report ‘s release coincides with the upcoming summit of G-8 leaders who will be attending a summit in Scotland next week. “Allianz and WWF call for a clearer policy framework to adjust long-term investments and credit lending for banks and investors accordingly,” said the announcement. “As an investor we need greater political and regulatory security, therefore we need a clear policy framework on climate change especially with regard to the post-2012 Emission Trading Scheme allocations,” Faber stressed.
The full report and accompanying interviews and comments can be accessed and downloaded on the Allianz Website at: http://www.allianz.com.
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