WEATHER EXTREMES, CLIMATE CHANGE, DURBAN 2011 ELECTRONIC PRESS FOLDER Status: 25.11.2011
Contents 1. Current meteorological knowledge 2. Extreme weather events 3. Political action required 4. Insurance solutions
CURRENT METEOROLOGICAL KNOWLEDGE 3
Current meteorological knowledge Climate change is a fact, and it is almost entirely made by man. The increased concentration of greenhouse gas in the earth's atmosphere has caused global mean annual temperatures to increase by 0.74 C in just the last 100 years. Depending on the institute conducting the analysis, 2010 was shown to be the warmest or second-warmest year since records began 130 years ago. The ten warmest years within this period all lie within the last 12 years. 4
Current meteorological knowledge Temperature increases by continent Ten-year mean temperatures 1900 2000 Simulation range for climate models that take only natural factors into account Simulation range for climate models that take anthropogenic factors into account as well 5
Current meteorological knowledge Due to a warmer atmosphere and increase in sea temperature, the sea level is rising. Greater weather extremes can be expected in many regions. Even with highly ambitious schemes, climate change cannot be stopped, but it can still be limited so that we do not reach any climate-change tipping points. This could only be achieved if the temperature rise was kept to 2 C over the pre-industrial era. According to the IPCC Fourth Assessment Report, global mean temperature on the earth's surface could rise by up to 6 C before the end of the century if global greenhouse gas emissions continue to develop unchecked. 6
EXTREME WEATHER EVENTS 7
Extreme weather events Munich Re has been analysing natural hazards and natural hazard losses for more than 35 years. For this purpose, Munich Re has set up the most comprehensive natural catastrophe database in the world, which currently comprises more than 30,000 000 events. The number of major weather-related natural catastrophes has almost tripled since 1980. The number of flood loss events has gone up by a factor of more than three, and the number of windstorm natural catastrophes has more than doubled. 8
Extreme weather events The rise in natural catastrophe losses is primarily due to socio-economic factors. In many countries, populations are rising, with more and more people moving into exposed areas. At the same time, greater prosperity is leading to higher h property values. It would seem that the growing number of weatherrelated catastrophes can only be explained by climate change. The view that weather extremes are more frequent and intense due to global warming is in keeping with current scientific findings, as set out in the Fourth IPCC Assessment Report as well as in the special report on weather extremes (SREX). Aggregate losses from weather-related natural catastrophes t since 1980 now total t US$ 1,600bn. 9
Extreme weather events The IPCC special report entitled Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation (SREX) refers to a number of changes in the intensity or frequency of weatherrelated natural catastrophes during recent decades as being probable. This can be seen in the increase in heatwaves and heavy rainfalls in many regions. In the future, the report sees an increase in the length, frequency or intensity of warm-weather periods as well as heatwaves. Droughts are also likely to become more frequent, along with heightened flood scenarios and a rise in the mean wind speed of tropical storms in some ocean basins. These statements fundamentally tally with the findings of Munich Re. 10
Extreme weather events Number of natural catastrophes worldwide 1980 2011 (2011 Jan. to Sept.) Number 1 200 1 000 800 600 400 200 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Geophysical events (Earthquake, tsunami, volcanic eruption) Meteorological events (Storm) Hydrological events (Flood, mass movement) Climatological events (Extreme temperature, drought, forest fire) 2011 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE As at December 2011 11
Extreme weather events Number of weather catastrophes worldwide 1980 2011 (2011 Jan. to Sept.) Number 1 200 1 000 800 600 400 200 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Meteorological events (Storm) Hydrological events (Flood, mass movement) Climatological events (Extreme temperature, drought, forest fire) 2011 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE As at December 2011 12
Extreme weather events Losses from natural catastrophes worldwide 1980 2011 (2011 Jan. to Sept.) (bn US$) 400 350 300 250 200 150 100 50 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Overall losses (in 2011 values) Trend overall losses Insured losses (in 2011 values) Trend insured losses 2011 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE As at December 2011 13
Extreme weather events Losses from weather catastrophes worldwide 1980 2011 (2011 Jan. to Sept.) (bn US$) 400 350 300 250 200 150 100 50 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Overall losses (in 2011 values) Trend overall losses Insured losses (in 2011 values) Trend insured losses 2011 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE As at December 2011 14
Extreme weather events Percentage distribution of natural catastrophes worldwide 1980 2011 (2011 Jan.to Sept.) 20,000 loss events 2,300,000 fatalities 13% 14% 32% 39% 35% 38% 11% 18% Overall losses* US$ 3,375bn 375bn Insured losses* US$ 840bn 22% 12% 12% 27% 9% 6% 39% 73% *in 2011 values *in 2011 values Geophysical events (Earthquake, tsunami, volcanic eruption) Meteorological events (Storm) Hydrological events (Flood, mass movement) Climatological events (Extreme temperature, drought, forest fire) 2011 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE As at December 2011 15
Extreme weather events Percentage distribution of weather catastrophes worldwide 1980 2011 (2011 Jan. to Sept.) 17,200 loss events 1,410,000 fatalities 15% 44% 53% 30% 41% 17% Overall losses* US$ 2,500bn Insured losses* US$ 735bn 17% 10% 7% 30% 53% 83% *in 2011 values Meteorological events (Storm) Hydrological events (Flood, mass movement) Climatological events (Extreme temperature, drought, forest fire) *in 2011 values 2011 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE As at December 2011 16
POLITICAL ACTION REQUIRED 17
Political action required Mitigation World climate negotiations Durban 2011 Adaptation Adaption 18
Political action required Mitigation Mitigation refers to all measures designed to reduce greenhouse gas emissions and thus all measures to combat the causes of climate change. The long-term goal of limiting global warming to 2 C over pre-industrial levels was set out in the Copenhagen Accord in December 2009. Global temperature has already risen by almost 0.8 C in relation to pre-industrial levels. Even if all emissions were to cease immediately, further warming would be unavoidable due to the climate system's s inertia and the fact that carbon dioxide remains in the atmosphere for over 100 years. For the upper limit of 2 C to be achieved with a probability of more than 50%, global emissions would have to at least be halved over 1990 levels by 2050. In addition, the turnaround in globally rising emissions would have to come well before 2020. With the current voluntary and non-verifiable emission reduction targets for the over 120 countries supporting the Copenhagen Accord to date, global l temperature t will increase by more than 3 C. 19
Political action required Adaption Even if the rise in mean global temperature can be limited to not more than 2 C above that prevailing in pre-industrial times, we will still have to adapt to the consequences of climate change. The need to adapt was recognised early on by the international community, which signed the UN Framework Convention on Climate Change. In 2005, the Nairobi Work Programme was launched. The most recent step was to set up a fund under the Kyoto Protocol to finance adaptation measures; the fund commenced operations in 2008. It is primarily intended to support the poorest countries. Adaptation was a central topic of the UN Climate Conference in Bali in 2007. It was agreed that immediate and more extensive adaptation measures are needed, especially for developing countries. Adaptation is therefore also included in the Bali Action Plan. The point at issue in Durban will be to determine which adaptation measures are to be implemented and how they are to be financed, in addition to the planned funds. 20
Political action required Cancún review Joint declaration on the 2 C target Voluntary commitment by the industrialised countries to make US$ 10bn per year in "fast-track" money fund available to developing countries for three years Industrial countries agree to provide US$ 100bn per year from 2020 21
Political action required Outlook for Durban The chance of the world climate summit in Durban leading to a climate protection agreement is practically zero. A change in the attitudes of the USA and China are not to be expected. Some progress could be made during the second round of negotiations with respect to the adaptation assistance programmes for countries hit particularly hard by climate change. The problem of global warming which humanity is facing does not appear to be resolvable at the level of the international community of states. For many countries, their own specific short-term interests appear to be more important than this long-term global risk. 22
INSURANCE INDUSTRY SOLUTIONS 23
Insurance industry solutions Primary insurance and reinsurance Munich Climate Insurance Initiative Renewable energy 24
Insurance industry solutions Primary insurance climate aspects For example, ERGO Property/ casualty Motor: Eco-friendly motor rate Buildings: Natural hazards insurance; solar installations Engineering Insurance Renewable energy Liability: Environmental insurance As part of its motor insurance, ERGO offers an eco-friendly motor rate to especially environmentally friendly models. The natural hazards insurance offers clients cover for natural catastrophes and possibly ensuing financial risks. In ERGO S building insurance, solar installations ti are also covered. ERGO offers technical insurance for numerous risks related to renewable energy; the photovoltaics market is the main focus. The liability insurance e.g. offers energy advisors and emissions experts cover against the financial consequences of a possible professional error or omission. 25
Insurance industry solutions Primary insurance climate aspects For example, ERGO Legal Photovoltaic inclusion in mediation Energy guide: Conversion and modernisation Life Private pension arrangements: sustainable funds Ethical, social and ecological standards for assets Health Ganznah magazine: Environmental- and climate topics for clients 26
Insurance industry solutions Munich Climate Insurance Initiative (MCII) Developing countries in regions which are highly exposed to natural catastrophes are particularly affected by the consequences of global climate change. In addition, it is often more difficult for these countries to adapt to growing risk. To ensure that these countries can be supported effectively, the Munich Climate Insurance Initiative (MCII) was set up by Munich Re participates in the United Nations' climate negotiations process. In 2008, it proposed a risk management system with insurance solutions for developing countries at Poznań (COP 14). 27
Insurance industry solutions Munich Climate Insurance Initiative (MCII) Some key points from this proposal were discussed in Copenhagen (COP 15) and Cancún (COP 16) and were even reflected on in the SBI Work Programme on Loss and Damage. According to MCII estimates, this risk management package of risk minimisation measures, support for microinsurance programmes, and financing of a climate insurance fund for top risks will cost around US$ 10bn annually. 28
Insurance industry solutions Munich Climate Insurance Initiative (MCII) Between 2011 and 2014 MCII is going to realise a project in the Caribbean; part of this project is to design and implement insurance solutions which connect risk reduction and the insurance of natural catastrophes in order to insure populations with low income against extreme weather risks. This plan, sponsored under the International Climate Initiative by the German Federal Ministry for the Environment, is also intended as a lighthouse project to show how insurance solutions can be used in adapting to climate change. 29
Insurance industry solutions Insurability of renewable energy With regard to climate change, Munich Re is developing a number of insurance solutions which will reduce the risk for investors in renewable energy and thus facilitate such investments in the first place. The spectrum reaches from standard insurance of industrial plants to complex solutions such as insurance for lack of wind or lack of sun, as well as a performance guarantee cover for technological manufacturers or cover for the exploration risk during geothermal drilling. 30
Insurance industry solutions Insurability of renewable energy Munich Re s insurance cover provides operators of solar plants and investors with more planning protection. Producers of modules can eliminate longterm technical guarantee risk, reduce financial risk, and offer greater security to their clients. In terms of renewable energy insurance, Munich Re expects a significant growth of premium volume in the next few years to a medium three-digit million amount. 31
Insurance industry solutions Investing in renewable energy Munich Re is involved in renewable energy in terms of capital investment, and in this respect will directly provide up to 2.5bn in the coming years. Investments are also possible via the desert power project, which Munich Re launched two years ago together with its partners and which it continues to promote within the Dii corporation. Construction of the first reference project could start next year. 32
Your contact Gerd Henghuber Spokesperson Strategic Topics Tel.: +49 89 38 91-98 96 Fax: +49 89 38 91-7 98 96 ghenghuber@munichre.com www.munichre.com 33