Londons life jacket July 07

London’s global lifejacket – climate proof?

Jane Milne

Climate Change Leader

Association of British Insurers

Market share in OECD

Market share in OECD (Direct gross premiums basis)

Canada3%

Germany9%

Spain2%

France6%

UK10%

Italy4%

Japan10%Korea

2%

Netherlands2%

USA43%

Other9%

Source: OECD

Market share worldwide

33%

14%

9%

6%

6%

4%

2%

2%

2%

2%

19%

United States Japan United Kingdom FranceGermany Italy South Korea CanadaNetherlands Spain Other

Insurance density

Ratio of Direct Gross Premiums by the Population

5,625

4,858

3,7523,551 3,512

2,725 2,625

2,348

1,445 1,391

0

1,000

2,000

3,000

4,000

5,000

6,000

UK USA Netherlands Germany France Canada Japan Italy Korea Spain

US$

Source: OECD

Leverage of UK capital

Retained Business

87

93 93 9490

81

91

84

0

10

20

30

40

50

60

70

80

90

100

USA Netherlands Korea Italy France UK Spain Germany

Ret

enti

on

rat

e (N

WP

/GW

P -

%)

Source: OECD

Megacities facing natural hazard risks (50 most economically important global cities)

Natural Hazard High hazard risk

Medium hazard risk

Low hazard risk

Tropical storm

6 2 9

Winter storm 3 6 8

Thunderstorm hailstorm or tornado

0 36 14

Flood 2 21 26

Storm surge 2 9 12

Climate impacts• Global temperatures have

already risen by 0.6°C and are likely to rise further by at least 1.5-2.5°C

• Sea level rises of at least 0.5m expected in UK by 2050-60

• Tropical windstorm effects predicted to increase intensity of storms – damage up by 66-75% in US and Japan

2005 US Hurricane Season Insured Losses

National Flood Insurance Program

$15.3 211,000 claims

Private insurance companies

$40.6 1.7 million claims

World beating underwriting• Climate change is a significant and growing source of risk to business performance• Impact will vary according to geography and sector•We need to understand the changing risks affecting customers - and the effectiveness of the measures they are taking to reduce the impacts of climate change

Global opportunities

•New and expanded products eg ETS compliance risks, D&O extensions, supply chain risks, cat bonds

•New processes eg carbon sequestration, clean coal

•New services eg climate risk consultancies, long range forecasting