The Association of British Insurers is increasingly concerned that “rising global temperatures will put the heat on insurance as flood costs rise.” This would in turn “lead to more expensive and harder to obtain property insurance in the UK and throughout the world,” according to the ABI’s latest report.
The study will be unveiled today at the ABI Climate Change Conference in London. The report, sponsored by the ABI, was compiled by AIR Worldwide and the UK’s Met Office. Entitled – The Financial Risks of Climate Change – it employs current climate and insurance catastrophe models, to examine the financial implications of the “widely predicted temperature increases of two, four and six degrees Celsius on the insured cost of flood and windstorm damage in the UK, and of typhoons in China.”
The ABI’s press bulletin notes that the predicted temperature changes in the UK “could increase significantly the insured cost of flood damage. The cost of windstorm damage is also likely to increase.”
The study cited the following figures:
— In the UK, the average annual insured losses from river flooding and flash floods could rise by 14 percent to £633 million [over $1 billion], based on a four-degree rise in global temperatures which could occur as early as 2060.
— The average annual windstorm losses could rise by 25 percent to £827 million [$1.368 billion], due to changes in ‘storm tracks’, along which cyclones travel.
— The insured cost of extreme flood losses occurring on average once every 100 years in Great Britain could rise by 30 percent to £5.4 billion [$8.932 billion].
— The costs of windstorms occurring on average once every 100 years could rise by 14 percent to £7.3 billion [over $12 billion].
— Wales and the south west region of the UK could be most badly affected. In the south west, average annual flood and wind damage insured losses could rise by 29 percent and 24 percent respectively.
— In China, average annual insured losses from typhoons could jump by 32 percent to £345 million [over $570 million], based on a global temperature rise of four degrees.
Nick Starling, the ABI’s Director of General Insurance and Health, commented: “These findings have serious implications for insurers, householders, businesses and governments. The continued widespread availability of property insurance in the future depends on taking action now to manage the threats of climate change.
“A two-degree temperature rise may be inevitable, but we can limit further increases. The clear message to world leaders meeting at the UN’s Copenhagen Climate Change Summit in December is that they must reach agreement on ambitious emission reduction targets. And, closer to home, the UK Government needs to push ahead with the Flood and Water Management Bill, and ensure long-term investment in flood management as a priority, so that the long-term flood risk is better managed.”
Source: Association of British Insurers — www.abi.org.uk
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