Allianz on Climate Change Impact

November 16, 2006

The world’s largest insurers continue to bring the threats posed by global warming/climate change home to the rest of the world, and to press for remedial action. A report earlier this week found that much of the world would probably experience major catastrophic weather events and accompanying mega-losses (See IJ Website Nov. 15).

That was the message contained in the new report “Adaptation and Vulnerability to Climate Change: The Role of the Finance Sector,” presented by the United Nations Environment Program (UNEP) in Nairobi on Wednesday. Allianz and its affiliate Dresdner Bank chaired the committee that produced the report.

“100 million people could be permanently displaced in the next 55 years for climate-related reasons – that’s almost the entire population of Mexico today,” said a bulletin on the Allianz Website ( “People living in coastal areas, who account for a quarter of the world’s population, will be hit particularly hard by climate change. And the economic loss caused by climate change will double every 12 years.”

Allianz singled out three main areas of concern. Concerning greenhouse gasses, Olaf Novak, head of the Natural Disasters Department at Allianz Reinsurance, stated: “Even if we managed to significantly reduce greenhouse gases now, we wouldn’t notice the difference until 2040. The earth’s temperature is definitely going to rise by at least 0.6 degrees Celsius [1.1°F], and if we do nothing, it could rise even more.” In fact, new studies suggest that the impact of emissions on our planet is 50 percent worse than was previously assumed.

Allianz also pointed out that 12 of the world’s 16 largest cities are on the coast and are still growing. “As far as some coastal towns are concerned, we need to seriously consider whether it is worth fighting the rising sea level, or if it would actually be more sensible to retreat,” Novak stated. “New Orleans, which has far fewer inhabitants now than it did before Hurricane Katrina, could well be the one to lead the way.”

The bulletin indicated that for the more “affluent countries” climate change is more of an economic problem, but “not an insignificant one.” On that point Novak warned: “There are still politicians, corporate bosses and private individuals out there who don’t take the issue seriously.”

Allianz said: “As the temperature rises, so too does the risk of natural disasters: by five percent each year according to the authors of the report. And the costs? Global economic losses due to climate-related natural disasters are increasing at an annual rate of six percent, so in twelve years’ time they will have doubled, and could have reached a record trillion dollars by 2040.”

“It is developing countries which suffer most,” Novak indicated. “For two billion people, drinking water is already a scarce resource, and temperature rises will cause both the demand for and the cost of clean water to increase significantly.” Risks arising from drought, erosion and floods will also increase.

“The report makes it painfully clear,” Allianz continued, “that if the UN wants to achieve its Millennium Development Goals, to halve global poverty and hunger by 2015 for example, then it must prepare for the impact of climate change.”

The bulletin also noted that where a real natural disaster occurs, such as the massive series of tsunami’s that struck Indonesia, Sri Lanka, Thailand and India at the end of 2004, relief was often slow to arrive. “The tsunami which hit almost two years ago was just a taste of what nature can do to places where nobody is prepared for disasters,” Novak stated. “Even in developed countries, state disaster relief arrives too slowly and is reactive rather than proactive, Hurricane Katrina showed that all too clearly.”

He concluded that, “Nowadays, most people accept the reality of climate change. But even if we are unable to prevent it, we still have a duty to adapt to it. Only if we act now will we be able avoid its worst effects and at least limit the impact of others.”

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