An Interesting Perspective on Climate Change

INSURANCE premiums for property will increase as global warming raises sea levels and creates more frequent and intense storms, the chairman of the world’s biggest insurance market Lloyd’s of London says.

Lord Peter Levene, chairman of Lloyd’s and a past British chief of defence, said the evidence for global warming had become “pretty overwhelming”.

“No one in the insurance industry seriously doubts that climate change is taking place,” he told an Australian British Chamber of Commerce lunch in Sydney yesterday. “For the insurer there are few greater concerns right now.”

Lord Levene says it is no coincidence that the 10 warmest years on record have all been since 1990.

“Glaciers are melting and sea levels are rising,” he said.

Lord Levene said 2005 was the worst year on record for natural disasters for property insurers, with claims of $A107.86 billion worldwide.

Hurricanes such as Katrina and Rita in the United States accounted for $A85.76 billion of this total. But 2006 was a far more benign year.

Lord Levene said some insurers had started pricing the risk of rising sea levels into premiums for property insurance for customers in coastal regions.

It’s normal to speak of the monumental monetary costs of combatting global climate change.  Ask the chairman of one of the world’s largest reinsurance markets, and you will hear about the cost of maintaining the status quo.  I don’t think this is limited to the insurance industry.  If the cost of risk allocation (insurance) is increasing then it is implied that risk is also increasing.  What are the monetary values of these increases in risk to other industries?  It seems clear that the potential harm from global warming is so severe that it calls for the use of the precautionary principle. 

It’s About Time

EU leaders should this week make the most ambitious commitment ever to tackle climate change, the EU Commission’s president said on Tuesday, but officials admitted that the devil is in the detail.

The 27 member states are keen to forge a united front when they meet in Brussels on Thursday and Friday and to place the European Union in the front line of the fight against climate change.

With temperatures, oil prices and the EU’s dependency on overseas oil supplies increasing, “the status quo is not an option,” president of the bloc’s executive body Jose Manuel Barroso told a news conference in Brussels.

The countries’ leaders are expected to agree on cutting carbon dioxide (CO2) emissions by 20 percent by 2020, and up to 30 percent if emerging economies, particularly China and India, join them, German EU presidency sources said in Berlin.

The only part I find surprising is that it took until now.  Domestic concern about environmental issues has been much higher in European countries than anywhere else over the last 50 years.  It’s promising to see the ‘issue framing’ move from ’symptom-focused’ to ’cause-focused’.