Munich Re calls for quick action on climate change

Australian
Thursday 31/12/2009 Page: 18

FRANKFURT: Munich Re, one of the world's largest reinsurers, believes economic and insured losses caused by climate change will continue to grow, and has called for a near-term deal to ensure a substantial reduction in global greenhouse gas emissions.

"We need as soon as possible an agreement that significantly reduces greenhouse gas emissions because the climate reacts slowly and what we fail to do now will have a bearing for decades to come," said management board member Torsten Jeworrek. "In the light of these facts, it is very disappointing that no breakthrough was achieved at the Copenhagen climate summit in December 2009," MrJeworrek added, pointing to the marked increase more or less tripling in major global weather related natural disasters since 1950.

Reinsurers and primary insurers provide insurance protection against losses caused by large natural and man-made disasters. Munich Re said it would step up its own initiatives in the matter, including investments of up to 2 billion ($3.25bn) in renewable energy and a strong commitment to the Sahara solar energy project Desertec Foundation.

The project hopes to come up with a feasible plan for generating solar energy in the Sahara within the next three years. Munich Re said losses caused by natural disasters cost the global insurance industry around $US22bn ($24.9bn) in 2009, helped by substantially lower US hurricane activity than a year earlier, when the insurance industry had to pay around $US50bn for damage caused by natural disasters such as winter storms, hurricanes, cyclones, floods and earthquakes.

The figures are similar to estimates by Swiss Reinsurance Company, which estimated at the end of November that the bill the insurance industry had to pay for natural disaster losses in 2009 amounted to about $US21bn. Munich Re said "severe weather events accounted for 45%, or nearly half, of global insured losses" in 2009.

It also said this year's lower bill for natural disasters and the absence of "severe hurricanes and other mega-catastrophes" should not be taken lightly, as there was a large number of moderately severe natural disasters. "In particular, the trend toward an increase in weather related catastrophes continues, while there has fundamentally been no change in the risk of geophysical events such as earthquakes," said Peter Hoeppe, who heads Munich Re's Geo Risks Research unit.