Canadian business is vulnerable to climate change and the increasing frequency and intensity of natural catastrophes, Lloyd’s Chairman Lord Peter Levene warned in a July 11 speech to the Vancouver Board of Trade.
Levene called on governments, businesses and insurers to “do more to understand and adapt to the implications of global warming.”
Based on current models, Levene said, Canada may have to deal with flooding of low-lying lands on its seacoast, a shrinking Artic ice cap, reductions in Great Lakes water levels, permafrost thawing and reduced river flow on the prairies.
“As a leading commercial property insurer in Canada, Lloyd’s has helped individual Canadians and Canadian businesses cope with major natural losses,” Levene said. “We need to estimate the full costs of climate change and choose adaptation strategies now, before it’s too late.”
Levene noted Insurance Board of Canada data indicate that major multi-payment occurrences for property damage due to extreme weather-related events totaled a record $860 million from January 1999 to July 2004. Levene also warned threats of terrorism and an increasingly litigious culture weighed on Canadian business.
“Canadian business leaders would do well to reconsider their exposure to terrorism,” Levene said, “particularly in an environment where the Toronto jihadis allegedly possessed three times the amount of ammonium nitrate used in the Oklahoma City bombing and where the CSIS (Canadian Security and Intelligence Service) believes an al-Qaeda attack is ‘probable.’
“Lloyd’s is a significant source of capacity for terrorism insurance, but underwriters have expressed their surprise that demand for terrorism insurance is underwhelming,” he said.
Levene also said an uncertain legal climate in Canada makes it difficult for businesses and individuals to get insurance coverage at the right price.
“Companies and individuals today are more vulnerable to lawsuits than ever before,” Levene said. “Recent legal developments are making it difficult for insurers to predict the cost of claims, driving up the price of coverage for both Canadian corporations and individuals. “Canadians have to decide whether they want the trend of expanding liability to continue or whether there should be some reasonable limits on what can be recovered in a lawsuit.”
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