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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