Climate Change and The Built Environment

Transcription

1 Climate Change and The Built Environment Committee on the Effect of Climate Change on Indoor Air Quality and Public Health June 7, 2010 Frank Nutter, President Reinsurance Association of America Flooding on Iowa s Cedar River June

2 Galveston on the coast of Texas on September 9, 2008 before Hurricane Ike made landfall. September 15, 2008 after Hurricane Ike had passed through. Apart from a few exceptions, the entire section of coast was razed to the ground. 2

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4 US$ bn Great Weather Catastrophes Overall and insured losses with trend % of insured losses caused by windstorms Overall losses (in 2008 values) Trend overall losses Insured losses (in 2008 values) Trend insured losses 2009 Münchener Rückversicherungs-Gesellschaft, Geo Risk Research, NatCatSERVICE As at January

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6 Total Value of Insured Coastal Exposure (2007, $ Billions) Florida New York Texas Massachusetts New Jersey Connecticut Louisiana S. Carolina Virginia Maine North Carolina Alabama Georgia Delaware New Hampshire Mississippi Rhode Island Maryland $224.4 $191.9 $158.8 $146.9 $132.8 $92.5 $85.6 $60.6 $55.7 $51.8 $54.1 $14.9 $895.1 $772.8 $635.5 $479.9 $2,458.6 $2,378.9 $522B increase since 2004, up 27% In 2007, Florida still ranked as the #1 most exposed state to hurricane loss, with $2.459 trillion exposure, an increase of $522B or 27% from $1.937 trillion in The insured value of all coastal property was $8.9 trillion in 2007, up 24% from $7.2 trillion in $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 Source: AIR Worldwide 11 Cat Models Where Climate Science Intersects with Insurance RMS AIR EQECAT 6

7 Impact on Insured Losses Concentration of people in Coastal Areas and flood plains Real estate-driven economies Increased property values Demand surge Business interruption Building codes / enforcement Zoning / land use 7

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9 Munich Re s strategic areas Risk assessment/ underwriting Changed frequencies/ intensities of weather hazards in underwriting and risk management Examples: Tropical cyclones, El Niño/La Niña, Prospective risk management Climate liability issues Management of assets Integration of sustainability criteria into investment strategies Examples: Investments acc. to sustainability criteria Significant expansion of renewable energy investments Retail fund investing acc. Dow Jones Sustainability New markets/ new products Pathway to low-carbon, hazard-adaptive economies: new business opportunities Examples: Covers for renewable energies Micro insurance in developing economies 9

10 Creating solutions to sustainability challenges: focus area climate change Coping with climate change requires both mitigation and adaptation measures Assess and manages the risk Advance (our) knowledge about climate change risk Quantify climate change risk Integrate climate change risk into underwriting and risk management framework Seize business opportunities Traditional catastrophe insurance Capital market solutions Weather risk solutions Influence the business environment Raise awareness, actively disseminate knowledge to all stakeholders and advocate a long-term, marked-based policy framework, through Publications, platforms (eg World Economic Forum), Centre for Global Dialogue, speaking engagements Lead by example Greenhouse neutral since October 2003 Reduced emissions per employee by 30% by 2008 (2013 target met) COyou2 program since

11 Elements of a Shared Long-Term Solution Stronger homes are safer homes and stronger homes and businesses cost less to insure. Strengthening of building codes and mitigation must be encouraged. Require that insurance in areas vulnerable to climate affected extreme events is risk based. Require insurers to credit hazard mitigation. Reform the NFIP to reflect climate risk. Provide tax credits for certain climate adaptation targets. Create revolving fund to offer loans to homeowners who want to strengthen their property. Purchase or relocate properties near coastal or river areas at risk of climate change. Transfer development rights from coastal properties to areas inland. There are Known Knowns. These are Things We Know that We Know. There are Known Unknowns. That is to say, there are Things that We Know We Don t Know. But there are also Unknown Unknowns. There are Things We Don t Know We Don t Know. Donald Rumsfeld 11

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