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26 February 2017
Businesses have been urged by Britain’s Prince Charles to disclose their exposure to natural disasters, to “help concentrate the mind” and encourage them to improve their resilience.
Making the call in London last week at the International Insurance Society’s 50th annual seminar, he described as “incredible” the present lack of engagement between the private and public sectors on ways to increase protection against natural catastrophe losses.
The prince says the lack of common methodology to assess the cost of disasters is also of “critical concern”, and should be addressed by the global insurance industry.
He was speaking in support of Willis CEO Dominic Casserley, who has proposed companies should adopt a more open approach to reporting their natural catastrophe risk exposures.
Lloyd’s Chairman John Nelson told the seminar the insurance industry must work with its clients to understand and mitigate the risks of climate change.
Admitting the princeʼs call for greater industry involvement in climate change action is “a big and difficult ask”, Mr Nelson says there are nevertheless grounds for optimism because it makes business sense.
“Business does business by attracting capital that requires a return, and failure to respond will damage profitability and return.”
While Mr Nelson says progress has been made over the past decade in terms of recognition of the challenges and developing greater resilience and sustainability, he believes this is “not uniformly the case throughout the global business community”.
“There is a commercial imperative brought about by the requirement that a sustainable return on capital is indeed a powerful force, and I believe it can be run in tandem with the aims of governments and the international community to build our resilience to a changing climate.”
Mr Nelson says there is “no doubt that the climate is changing. Thirteen of the 14 warmest years on record have occurred in the 21st century.
“Each of the past three decades has been warmer than the previous one, and the cost of annual disasters has risen from $US50 billion ($53.06 billion) in the 1980s to $US200 billion ($212.26 billion) over the past decade.
“I think that the data has now convinced all but the most extreme sceptics that climate change is here and it’s real. This affects insurers very closely, because in many cases we finance the recovery and the rebuilding.”
Mr Nelson says a 20cm sea level rise at the southern tip of Manhattan Island increased Superstorm Sandy’s surge losses by 30% when it hit New York in October 2012.
insuranceNEWS.com.au was a gold sponsor of the society’s conference.
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