Insurance giant cites climate in rising North American disaster costs

By Ben Geman - 10/17/12 04:35 PM ET

North America incurred $510 billion in insured losses from weather catastrophes over the last three decades, and climate change is emerging as one of the reasons why, reinsurance giant Munich Re said Wednesday.

The German insurance company released a study on the toll of natural catastrophes, such as violent storms, floods, drought and heat waves, in North America between 1980 and 2011. “Nowhere in the world is the rising number of natural catastrophes more evident,” the company said.

“The study shows a nearly quintupled number of weather-related loss events in North America for the past three decades, compared with an increase factor of 4 in Asia, 2.5 in Africa, 2 in Europe and 1.5 in South America,” the company said in a summary.

It adds that climate change is contributing to the trend. From Munich Re:

Climate change particularly affects formation of heat-waves, droughts, intense precipitation events, and in the long run most probably also tropical cyclone intensity. The view that weather extremes are becoming more frequent and intense in various regions due to global warming is in keeping with current scientific findings, as set out in the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) as well as in the special report on weather extremes and disasters (SREX). Up to now, however, the increasing losses caused by weather related natural catastrophes have been primarily driven by socio-economic factors, such as population growth, urban sprawl and increasing wealth.

Peter Höppe, head of the company’s Geo Risks Research unit, said in a statement that the findings are the “initial climate-change footprint in our U.S. loss data from the last four decades,” and added that previously the evidence was not as strong.

Another Munich Re official called it vital for the industry to consider climate-related risks going forward, noting that currently climate change-related increases in hazards “are not automatically reflected in the premiums.”

“In order to realize a sustainable model of insurance, it is crucially important for us as risk managers to learn about this risk of change and find improved solutions for adaptation, but also mitigation,” said Peter Röder, a board member, in a statement.