Insurance company on climate change impact

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Lloyd’s details ‘growing impact of climate change’ as U.N. meets

Insurance Journal

25 June, 2012

Lloyd’s has published a roundup of the environmental issues inherent in as the world grows warmer. The recently concluded Rio +20 Conference was an attempt – 20 years after the first conference – “to try to reach agreement on sustainable growth, controlling world emissions and managing the growing impact of climate change,” Lloyd’s explained. How well the 3000+ delegates did, or didn’t, accomplish these tasks future generations will learn.

Here is a summary of the environmental issues Lloyd’s selected as the most significant ones threatening the planet:

Wildfires – There is growing evidence that prolonged heat waves are likely to lead to a greater incidence of wildfires, particularly in Southern Europe and the Western United States. 2009 saw wildfires raging out of control in Spain, France, Greece and Italy. In Spain, this destroyed more land in just a few days than the entire wildfire season of 2008.

Floods – The severity of flooding on communities is affecting a growing number of people across the world. In both 2009 and 2011, floods in southern India took hundreds of lives and left millions homeless. The 2011 Thailand floods were the largest insured fresh-water loss in history. The Mississippi floods of 2011 disrupted an estimated 13 percent of US petroleum refinery output, resulting in a rise in petrol prices.

Droughts – The incidence, onset and severity of drought is increasing across Europe, the south-west US and West Africa, with mounting economic and human costs. A 2011 European Commission study estimated droughts in Europe had cost their economies $100 billion over the last 30 years. Last year, the charity World Vision estimated the drought in the Horn of Africa killed tens of thousands of children and pushed millions of families to the brink of starvation.

Lloyd’s also highlighted some ancillary effects caused by the lack of rain including, dust storms, with the southwestern US experiencing an ever increasing number, and the increase in land subsidence in parts of Europe. In France, for example, subsidence-related claims have risen by over 50 percent in the last 20 years, costing the affected regions an average €340 million [$425 million] a year. Water management and hydrology are also affected.

In addition Lloyd’s pointed out that “the world’s demand for water has tripled over the last 50 years". All the big three grain producers – China, India and the US – are over-pumping aquifers to meet growing water needs. More than half of the world’s population lives in countries where water tables are falling.

Pestilence, weeds and infestations – Climate change “encourages the march northwards of weeds, which compete with agricultural crops and often win. In the US, for example, it’s been calculated that southern farmers lose 64 percent of their soybean crop to invasive weeds – the consequences for food supply and price as weeds head northwards are significant. In the US alone, the government spends $11 billion a year on agricultural weed control.”

Also as more northerly areas warm up, insects and pathogens thrive, this “may lead to an increasing use of pesticides as the size of areas affected grows. Earlier springs and warmer winters will also lead to growing insect populations.

“Extreme weather events encourage outbreaks of disease and infestation; flooding leads to a growth in fungal growth and nematodes while drought leads to increases in locust and white fly populations.”

Arctic warming – The Arctic is warming more swiftly than anywhere else on earth. “As it does so, Arctic summers witness a growing retreat of regional sea ice year-on-year. In 2011, annual near-surface air temperatures over much of the Arctic Ocean were 1.5 degrees centigrade [2.7°F] higher than the 1981 – 2010 baseline, while Arctic sea ice coverage fell to a low of 4.33 million square kilometers [2.7 million square miles] – 2.38 million square kilometers [1.4875 million square miles] less than the 1979 – 2000 average.” As the Arctic warms and the ice melts it absorbs rather than reflects heat, which accelerates the process.

Hurricanes – “While there is no conclusive evidence that climate change causes tropical storms, it is possible that climate change is increasing their severity. There appears, for example, to have been a pole ward shift in the main Northern and Southern Hemisphere extra-tropical storm tracks.

“The costliest hurricane to hit the US to date has been Katrina, which came ashore in 2005. The total economic loss caused by Katrina has been estimated to be as high as $250 billion, taking into account the damage, disrupted gas production and general impact on national economic growth. Around 300,000 homes in New Orleans were rendered uninhabitable and over 1,200 people were killed.”

Heat waves – In November 2011, the Intergovernmental Panel on Climate Change published a report warning that the frequency of heat waves will increase by a factor of 10 in most regions of the world if carbon dioxide and other gases continue to be produced at today’s levels.

“A 2009 study by Kings College and the Met Office predicted that the number of heat-related deaths in cities like London will quadruple by 2080. Given that the British heat wave of 2003 is estimated to have killed at least 3,000 people and the Russian heat wave of 2010 led to over 55,500 deaths these predications have serious implications.”

Lloyd’s said it “believes strongly that insurance has a vital role to play in helping businesses and communities adapt to the effects of climate change. We were a founding member of the ClimateWise initiative, which provides insurers with a framework to set out how they build climate change into their business operations"

Source: Lloyd’s of London