responses to climate change from a reinsurers perspective copenhagen, 22nd january 2008 eberhard...
TRANSCRIPT
Responses to climate change from a reinsurer’s perspective
Copenhagen, 22nd January 2008
Eberhard Faust, Munich Re
2
0
50
100
150
200
1950 1960 1970 1980 1990 2000
Overall losses (2006 values)
Insured losses (2006 values)
Trend insured losses
Trend overall losses
Lo
ss [
US
$ b
n]
Great catastrophes
Loss trends from natural hazards world wide (1950 – 2006)
2004 & 2005
hurricanes
0
4
8
12
16
1950 1960 1970 1980 1990 2000
Nu
mb
er
Temperature extremes (e.g. heat wave, drought)
Storm
Flood
Geophysical hazards
Great catastrophes
Global weather catastrophes:
1977-1986: US$ 9bn/year
1997-2006: US$ 45bn/year
3
Windstorm losses in Denmark: January 2005
- High susceptibility of modern societies, infrastructures and industrial technologies to natural hazards.
4
0
500
1000
1500
2000
2500
3000
3500
4000
4500
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
Natural Disasters in Scandinavia 1980 – 2007(Norway, Sweden, Denmark, Finland) – Overall and insured losses
Mil
lio
n €
Overall losses (2007 values)
Insured losses (2007 values) Winter storm Anatol, 3-4 Dec 1999
Winter stormGudrun/Erwin, 7-9 Jan 2005
© 2008 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE As at January 2008
Denmark:€ 2.6bn overall€ 2.1bn insured
Denmark:€ 1.1bn overall€ 0.76bn insured
5
Natural Disasters in Scandinavia 1980 – 2007(Norway, Sweden, Denmark, Finland) – Percentage distribution
Earthquake/Subsidence
Extreme temperatures
Storm
Floods
Number of deaths: 113Number of events: 163
Overall losses: 15,000m €** Insured losses: 6,500m €**
** 2007 values
© 2008 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE As at January 2008
1%
59%17%
23%
0%
76%
4%
20%
80%
5%
0%15% 0%
95%
5%
6
Time series of mean climate parameters
GLOBAL2007 departure: +0.41°C 7th warmest on record (preliminary assessment)
Source: Climatic Research Unit, University of East Anglia, 2007,extended
Global average sea levelDifference from 1961-1990Source: IPCC 4AR 2007
Northern Hemisphere snow coverDifference from 1961-1990Source: IPCC 4AR 2007
1. 1998 0.52
2. 2005 0.48
3. 2002 0.46
4. 2003 0.46
5. 2004 0.43
6. 2006 0.42
7. 2007 0.41
8. 2001 0.40
9. 1997 0.36
10. 1995 0.28
10 warmest years since 1850 (global)
8 warmest years comprise all of the 7 last years
7
Humanity‘s contribution to global warming
Black: Observed global temperatureYellow: Simulation with climate modelsRed: Running mean of simulations
Natural drivers (sun, volcanism)and man-made emissions (greenhouse gases, particulates)
Black: Observed global temperature Light blue: Simulation with climate modelsBlue: Running mean of simulations
Only natural drivers (sun, volcanism)
Source: IPCC 4AR 2007
8
Observed climate change in Denmark
Annually +1.5°C warmer today
than in the 1870s
Mean annual temperature1873 - 2006
Source: DMI 2007
°C
Mean annual precipitation1874 - 2006
Source: DMI 2007
mm
Annually 100 mm more precipitation today
than in the 1870s
9
Source: DMI 2007
Observed climate change in Denmark
No obvious trend in storminess over 100 years…
But climate models project for the future (2080s):
… project onto maximum wind driven surge heights
m
Wind driven surge heights
Woth/von Storch 2007
Enhanced winter wind maxima over Denmark in the 2080s…
HadAM3H, scenario A2
%
Woth/von Storch 2007
10
Sea level rise for various emission scenarios
*Basis: Range of ΔT = 1.5º-5.8ºC (IPCC TAR)
A1FI
B1
140 cm
50 cm
Source: S. Rahmstorf (2007), Science, 315, 368
IPCC 4AR 2007:Range of mean global sea level rise (2081-2099): 20 – 60 cmNorth Sea: plus 10 – 15 cm
80 cm
Scenario 2050s:+ 30 cm SLR + 5 cm North Sea effect + 5 cm wind driven surge (in total: +40 cm)
Scenario end of 21st century:+ 80 cm SLR + 10 cm North Sea effect + 30 cm wind driven surge(in total: +120 cm)
Scenarios for maximum surge levels
11
Projected climate change for Denmark
Winter 2080s:
- increased storminess, maximum windspeeds up to 10% higher- maximum storm surge levels could be 70 – 180 cm higher (sea level rise + increased wind driven surge heights)- precipitation will increase by up to 40%- temperatures will be higher by up to 3°C
Summer 2080s:
- precipitation will decrease by up to 25% (particularly in northeast Jylland and Sjælland)- less rain days, extreme precipitation events could even intensify- more hot days, longer dry periods
12
Consequences for the insurance industryUnderwriting/risk management
Climate change requires appropriate risk management
Cooperation of all parties involved required:
Insured persons or entities
Primary insurers
Reinsurers
Capital markets
Governments/public authorities
Risk financingRisk control
Adequate technical pricing
Accumulation control
Substantial deductibles
Liability limits
Loss prevention/information of the insured
Improved claims settlement
Reinsurance, retrocession and risk capital
Risk evaluation
Use of probabilisitc nat. cat. risk models and
adjustments to changing hazard situations
Risk identification
Impact of weather disasters on the
international insurance market
13
Carbon neutrality of Munich Re
Munich Re Munich: 2009Munich Re Reinsurance worldwide: 2012
Measures :• Reduction of emissions per employee • Usage of "green" power electricity • Investment in renewable energies and afforestation • In return for remaining emissions investment in emission certificates used for climate-protection projects in emerging countries
14 Munich Re’s approach to climate changeStrategic areas
Management of assets
Integration of sustainability criteria into investment strategies
Examples:
• Investments acc. to sustainability criteria
• Development of a climate asset analysis tool
• Retail fund investing acc. Dow Jones Sustainability
• Transparency (CDP participation)
Changed frequencies/ intensities of weather hazards in under-writing/risk management
Risk assessment/ underwriting
• Tropical cyclones, El Niño/La Niña, …
• Prospective risk management
Examples:
• Climate risk analyses of clients’ portfolios
• Holistic approach in risk models (budgets)
New markets/new products
Pathway to low-carbon, hazard-adaptive economies: new business opportunities
Examples:
• Kyoto Multi Risk Cover (delivery of carbon credits as planned)
• Covers for renewable and low-carbon energies/ energy efficient technology
• Microinsurance in developing economies
15
Munich Re’s approach to climate change
Strategic areas: Renewable energies
Offshore Windfarm near Copenhagen
Source: Bundesverband WindEnergie e.V.
Source: Ocean Power Delivery Ltd
16
Munich Re’s approach to climate change
The insurance sector’s role & required policy preconditions
Required policy preconditions
- regulatory frame (building codes, land use, prevention measures)
The role of insurance industry – in partnership with society
- provision of data on weather-related losses to science, political decision makers and the public
- products enhancing society’s hazard-adaptive capability
- transparency of risks via risk measurement & risk adequate premiums=> sound actions, prevention, reduced loss loads for society
- products promoting society’s emissions reduction goals
17
To sum up …
Climate change
- large global challenge, also for Denmark (sea level rise, storms, storm surge, floods …). Also provides substantial business opportunites for the insurance sector.
- e.g. insurance solutions for renewable energies (off-shore wind, wave power plants, …) besides nat cat covers
Insurance industry’s role
- societal transparency of risks
- products promoting society’s hazard-adaptive capability and emission reduction efforts
- investment decisions due to sustainability criteria and climate sensitivity of enterprises
Insurance industry aligned with societal interest
- good match of the insurance industry’s business model and societal & clients’
interest (hazard-adaptive society, emissions mitigation)
Thank you for your attention!
19
Date Country/Region Event Fatalities Overall Insured losses (Mio. €*)
3.-4.12.1999 Denmark Winter storm Anatol 7 2,600 2,100
8.-9.1.2005 Denmark Winter storm Erwin 4 1,100 760
15.5.-31.7.1992 Denmark Drought 0 680 0
24.-25.11.1981 Denmark Winter storm, storm surge 9 290 130
25.-26.1.1990 Denmark Winter storm Daria 0 90 45
13.-14.1.1993 Denmark Winter storm Verena 0 90 40
18.01.1983 Denmark Winter storm 2 70 55
29.-30.1.2000 Denmark Winter storm Kerstin 0 65 40
12.-15.1.1984 Denmark Winter storm 0 50 0
25.-27.2.1990 Denmark Winter storm Vivian 0 45 30
Natural Disasters in Scandinavia 1980 – 200710 costliest events in Denmark
*losses in original values
© 2008 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE As at January 2008
20
Munich Re’s approach to climate change
Risk measurement / underwriting
- For instance, adjustment of risk measurement to enhanced atlantic hurricane
activity since the mid-1990s
50
100
150
200
250
300
350
400
450
500
1 10 100 1.000 10.000
Return Period
Lo
ss [
US
$ b
n.]
US Nationwide
all events from historical catalogue
adjusted to current warm phase activity