Insurers count costs of climate change

Second-highest economic losses ever in 1998; report suggests climate change to blame

A report produced by UK insurance firms has suggested that global warming is causing a greater frequency and severity of natural disasters such as hurricanes. Produced by a UK-based commercial research centre, the report "indicates that there is a perceptible change which goes beyond natural cycles," according to David Crichton, environmental issues manager at major UK insurer CGU. The findings confirm what many insurance companies had already assumed. Reinsurance firm Munich Re has compared the scale and cost of natural catastrophes in the 1990s and the 1960s and concluded that the number of catastrophes is now three times greater and has caused a 15-fold increase in the cost to the industry. Last year saw the second-highest losses ever suffered by the industry, mainly caused by hurricanes and associated flooding in the Americas, whose frequency was influenced by the El NiƱo effect. A team from University College London this week unveiled a forecasting system to predict the probability and intensity of hurricanes expected for a given year, based on meteorological data collected in the previous year. Sponsored by a consortium of seven UK insurance companies under the name Tsunami, the new system is intended to give companies a greater lead-time in calculating risks for the forthcoming year and raise the possibility of millions of pounds in savings.

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