Ninety per cent of major disasters between 1995-2015 were caused by weather-related events, according to the Human Cost of Climate Change, a UN report issued this week. The US is the country most affected, with 472 disasters tracked. Canada by comparison gets off pretty lightly with less than 69 disasters tracked.
According to The United Nations Office for Disaster Risk Reduction (UNISDR), global economic loss caused by natural disasters, including earthquakes and hurricanes, is between US$250bn to US$300bn annually.
As the reality of climate change becomes apparent, an increasing number of companies are seeking coverage to adequately protect themselves against the risks of climate change. But the unpredictability of climate change has made modelling for appropriate products almost impossible.
Ron Anderson, director of underwriting at American Risk Management (ARM), said: “No company that I am aware of at this point in time provides environmental insurance against climate change.
“We don’t know what’s a reasonable trigger for coverage and we don’t know if we can actuarially project what the potential may be,” he said.
The obvious ramifications of climate change may trigger companies to buy insurance that covers the cost of restoring damage caused by pollution to air and water, but according to the Nature Conservancy, and affirmed by the UN report, the risks of climate change extend well beyond rising temperatures. Economic losses and the rise of heat-related illnesses, are some of the other consequences of climate change not often discussed.
Margareta Wahlstrom, head of UNISDR, said: “There is a need to reduce existing levels of risk and avoid creating new risk by ensuring that public and private investments are risk-informed and do not increase the exposure of people and economic assets to natural hazards on flood plains, vulnerable low-lying coastlines or other locations unsuited for human settlement.”
Anderson thinks that the environmental insurance market is still developing and “maybe there will be something definitive in the next ten years.”