Lloyd's chief warns of climate-based insurance costs

Posted: 19 January 2007

The oceanic windstorm season will lengthen and its impact will be felt over a wider geographic area than ever before because of climate change, the chairman of Lloyd's of London has warned. This will have an excellerating impact on the insurance industry, he said.

In a speech sponsored by the World Affairs Council of Washington D.C. on January 12,2007, Lord Peter Levene said: "Weather-related catastrophes are costing the global insurance industry more than ever before." He said that the number of natural catastrophes doubled between the 1960s and 1990s, but insured losses - the majority weather-related - increased almost sevenfold.

In 2005 "the worst year ever" global insurance claims reached $83 billion, with US hurricanes accounting for more than 80 per cent of the total, he said.

The trend is likely to continue, and "we can only expect it to accelerate as climate change takes hold," Lord Levene said. Warmer sea-surface temperatures will mean more frequent landfalls and longer storm seasons, he said.

Lloyd's believes a $100 billion catastrophe could occur anywhere on the US Atlantic coast, Lord Levene said. He called for "greater willingness to consider radical land use policies for affected areas." He also called for an examination of "government aid and unsound building and location decisions."

He added that Lloyd's is already talking with US industry leaders "to form a high-level task force to examine the risk implications of climate change."

Source: A Washington correspondent