Ideology, ignorance, and vested business interests are the triplets that fuel climate disruption denial and block action in the face of onrushing catastrophe.
But one industry whose existence and continued profitability depends upon a rational response to our ongoing atmospheric chemistry experiment – insurance – has taken a sober, cleared-eyed look at the grim future it faces with global climate disruption. And John Nelson, the chairman of the venerable Lloyd’s of London, is calling on the insurance industry to adopt “catastrophe modelling.”
Lloyd’s has issued a report- Catastrophe Modelling and Climate Change - that slams home the facts that the scientific evidence on climate disruption is “conclusive,” and that climate disruption "will accelerate." That has the potential to affect extreme weather events, and therefore the insurance industry.
The study points out that insurance industry and others use catastrophe modelling extensively now, but because these models rely on historical data, they may not capture the increasing severity of losses that the industry faces from extreme weather with accelerating climate disruption. The study cites this example:
The approximately 20 centimetres of sea-level rise at the southern tip of Manhattan Island increased Superstorm Sandy’s surge losses by 30% in New York alone.
Catastrophe modelling will surely affect insurance policies and business investment. Will it move policymakers and public opinion as well?Change will touch all of us. I firmly believe that understanding and incorporating climate change into future modelling has become essential for anyone making long-term financial commitments, be that investing in infrastructure, housing or indeed policy.Ultimately, insurance exists to pick up the pieces and pay the claims when the likes of a Hurricane Katrina or a Superstorm Sandy strike. But to continue to do this, as Lloyd's has done since 1688, insurers must factor climate change into modelling, and develop the tools we need to understand and evaluate its impact.