8/8/2019 Climate Change and Insurance

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CLIMATE CHANGE AND INSURANCEAccording to the Munich Climate Insurance Initiative, an international effort of

Munich Re, the UN, World Bank and other experts,

CL IMA TIC CH A NG E IS A L RE A D Y INF L U E NCING TH E F RE Q U E NCY A ND INTE NS ITY

OF NA TU RA L CA TA S TROP H E S . . . . 2001 T O 2004 WE RE A MONG TH E F IVE

WA RME S T RE CORD E D WORL D WID E S INCE 1861. . . . S INCE TH E 1970S , M A J O R

TROP ICA L S TORMS BOTH IN TH E A TL A NTIC A ND TH E PA CIF IC RE G ION H A VE

INCRE A S E D IN D U RA TION A ND INTE NS ITY BY A BOU T 50 P E RCE NT . . . .

I F TH E S CIE NTIF IC G L OBA L CL IMA TE MOD E L S A RE A CCU RA TE , TH E P RE S E NT

P R O B L E M S W I L L B E M A G N I F I E D I N T H E N E A R F U T U R E . T H E S E MOD E L S S U G G E S T

TH A T WE S H OU L D E X P E CT : INCRE A S E IN TH E F RE Q U E NCY A ND S E VE RITY OF H E A T

W A V E S , D ROU G H TS , BU S H F IRE S , TROP ICA L A ND E X TRA TROP ICA L CY CL ONE S ,

TORNA D OS , H A IL S TORMS , F L OOD S A ND S TORM S U RG E S IN MA NY P A RTS OF TH E

W O R L D; NE W E X P OS U RE S ( L IKE H U RRICA NE S IN TH E SOU TH AT L A N T I C) ; A ND

MORE E X TE NS IVE D A MA G E , E CONOMIC , S O C I A L , A ND E NVIRONME NTA L IMP A CTS

F ROM WE A TH E R -RE L A TE D D IS A S TE RS . (SOU RCE : MU N I C H C L IMA TE INS U RA NCE

I N I T I A T I V E)

Pakistans current flooding, the worst recorded natural disaster in the countrys

history. Many scientists and analysts believe that these events are harbingers and

now it is the time to consider how insurance can protect companies against future

climate-related disruption and risk.

Till now, no one has yet successfully sued a company for climate change damageallegedly caused by greenhouse gas (GHG) emissions. There are law suits blaming

industrial emitters for GHG emissions responsible for global warming, extreme

weather events and other natural disasters. These lawsuits have arisen across

Alaska, Washington, D.C., California and Louisiana. Awareness among stakeholders,

mostly the shareholders has resulted in resolutions that force companies to limit

their carbon emissions. Corporate executives and risk managers are becoming more

than ever concerned about business risks related to climate change.

Though the climate change issues and claims are still relatively new and not as of

yet commonly applied concepts, some businesses have already started thinking

about policies for their portfolios. Such policies include comprehensive general

liability, directors and officers liability, and first-party property damage and business

interruption policies.