Lloyds Of London - Climate Change May Destroy Insurance Industry

[hatrack]

Lloyd's of London, the oldest insurance market in the world, yesterday urged its members to start taking global warming more seriously, by increasing prices to avoid being "swept away" in a sea of future financial claims. Premiums will have to rise and some risks might even be classed as uninsurable due to greenhouse gases and rising sea levels, warned Lloyd's in a report entitled Climate Change, Adapt or Bust.

"Although it's almost two decades since the UN recognised that climate change was a catastrophic threat to the Earth, it's clear that the insurance industry has not taken catastrophe trends seriously enough. Climate change is today's problem not tomorrow's. If we don't take action now to understand the changing nature of our planet we will face extinction," said Lloyd's director, Rolf Tolle.

Recent natural disasters revealed the inadequacy of capital and pricing methods and there was a need for catastrophe estimates to be constantly updated in line with scientific evidence, he said. Insurers should cease to base risk premiums on historical data and do more to look ahead and factor in scenarios connected with climate change, says the report.
Lloyd's, which has the capacity to write £15bn worth of business this year, did not want to enter the politicially contentious debate on how much human activity affected global warming but was happy to accept the "growing body of opinion" on the issue. The rising cost of weather-related catastrophes made it impossible for the insurance market to ignore what was happening with rising carbon dioxide levels, it said. In the short term the insurance industry would have to invest more time and money in academic research as well as convert scientific predictions into practical guidance for the sector.

EDIT

http://business.guardian.co.uk/story/0,,1791065,00.html

[iconoclastic cat]

1. Unless, of course, they take the money and run.

As in, refuse to pay claims.

[Nihil]

2. I knew there'd be a silver lining somewhere ...

:evilgrin:

And, of course, to accelerate the "payback" to the infamous gamblers
(oops, "Lloyds Names") I suggest the scaling back of premiums - save
the money and use it to pay off outstanding debt ...

[NNadir]

3. Well the bright side is that they're not insuring nuclear power plants.

Granted, they would have had to pay zero claims over two thousand reactor years of operations, and granted that actuaries who ignore data are not actually scientists, but I often hear that the reason to oppose nuclear power is vaguely connected with as the poet writes...

"...insurance men who go

check to see that no one is escaping

to Desolation Row."

http://www.bobdylan.com/songs/desolation.html

Insurers know everything.