Lloyd’s of London and other insurers called for collective action to address climate change on Thursday, after a report from the UK regulator this week highlighted risks to their industry from global warming.
In an open letter to Bank of England Governor Mark Carney, 15 senior insurance executives said they welcomed the Prudential Regulation Authority’s (PRA) report, which said the insurance industry could be hit by climate change in “diverse, complex and uncertain” ways.
The UN’s climate boss warned last month that national promises to cut emissions so far would cap warming at an unacceptably high level, heightening concerns in the insurance industry about politicians’ lack of resolve.
“The insurance leaders are also calling for the PRA’s report to lead to more urgent collective action to reduce the risks of climate change impacting society, and ultimately the insurance industry,” the insurers said in a statement.
They included Lloyd’s of London’s Chief Executive Inga Beale and RSA CEO Stephen Hester. In their letter to Carney, they also said they wanted a regulatory environment that “allows our industry to fulfill its full potential as society’s risk manager and to help maintain risk exposure within insurable levels.”
Carney said in a speech at Lloyd’s on Tuesday that increasing levels of physical risk from climate change could present significant challenges to general insurers.
At the United Nations Climate Change Conference in Paris in December, countries will try to hammer out a deal to slow manmade climate change by aiming to keep temperatures below a ceiling of 2 degrees Celsius above pre-industrial levels.
“An increase in temperature of more than 2 degrees could lead to a lack of affordable insurance,” Carmen Bell, policy advisor for personal insurance & general insurance at trade body Insurance Europe, told Reuters.
The PRA report also stressed that the repricing of carbon-heavy investments could hit insurers’ investment returns, a concern for insurers who have increasingly relied on investment income in a competitive underwriting market.
The report also said there were likely to be increased liability claims under policies such as directors and officers’ (D&O) insurance as a result of climate change-related damage.
(Additional reporting by Jonathan Gould; Editing by Steve Slater and Susan Fenton)
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