Insurers: Governments must help us prepare for natural disasters

Insurers managing more than $9trn in assets have called on governments around the world to tackle climate change and build resilience to increasingly-common natural disasters.

Economic losses from natural disasters in the last decade amounted to around $1.9trn while insured losses were about $600bn.

On Saturday, members of the UNEP FI Principles for Sustainable Insurance (PSI) – the largest collaboration between the UN and the insurance industry – released a statement urging Governments to help them reduce this risk.

Specifically, PSI said Governments should adopt the UN Post-2015 Framework on Disaster Risk Reduction which is currently being formulated at a UN conference in Sendai, Japan. 

Michael Morrissey, president of the International Insurance Society, a signatory to the statement, said: “Recognising the unique roles of the insurance industry as risk managers, risk carriers and institutional investors is key to harnessing its full potential in disaster risk management, and in supporting the transition to a sustainable economy.” 

Insured losses from the UK floods in 2014 reached £1bn.

Stress tests

The insurance industry was not the only institutional investor to focus on the increasing risk of climate change this weekend, as the world’s largest sovereign wealth fund upgraded its sustainability requirements for companies it invests in.

Norway’s Government Pension Fund Global (GPFG) – worth $893bn – will now be asking companies to forecast their business strategy in a 2C world – the global upper limit to avoid dangerous climate change.

Environmental charity WWF described the announcement as the tipping point the world needs to stop financing polluting energy. “This is a strong signal of a changing world, facing up to the reality of acting on climate change,” said Arild Skedsmo from WWF-Norway.

“This means coal, oil and gas companies in which GPFG invests are being asked to consider just how robust their business model is in a world managing to tackle the worst impacts of climate change. So, far most oil companies have dismissed this as unrealistic and placed their bets against global action on climate change.”

Brad Allen

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