Climate change may need more attention from the insurance industry
Lloyd’s of London, one of the largest insurance companies in the world, has released a new report titled “Catastrophe Modeling and Climate Change.” The issue of climate change has been steeped in controversy for some time. There are those that suggest that climate change is little more than an exaggeration of a natural process that has been occurring for millennia. Others suggest that if climate change continues to occur unabated, the human species may be faced with the very real possibility of extinction. Whatever the case may be, Lloyd’s of London suggests that the issue may be cause for concern, at least in regards to severe weather.
Report highlights the growing threat of climate change
In the report, Lloyd’s notes that the planet’s “climate system is warming” and goes on to support this claim with a large body of evidence from various scientists and research organizations. The increasing temperature of the climate is leading to fairly volatile weather systems that are sparking catastrophic storms in some parts of the world. Lloyd’s suggests that the rate at which emissions are being introduced into the atmosphere and how dramatically the world’s climate is being affected is due to human action.
Hurricane Sandy may have been triggered by climate change
The report also suggests that 2012’s Hurricane Sandy was largely caused by climate change. The storm, which formed on October 22, 2012, and struck land on October 31, was unnaturally strong given its location and the time of year. The 2012 hurricane season was noted as being extremely active, but none of the other storms that formed during that period reached Sandy’s strength. Hurricane Sandy caused an estimated $68 billion in damage, much of which has yet to be resolved due to ongoing issues concerning floods and the insurance industry at large.
Insurers may need to take steps to update their financial models to account for climatic events
Many organizations within the insurance industry have made an effort to avoid the politicization of climate change, but they have also noted that the issue does require serious attention in order to avoid future disaster. Lloyd’s is advising that the insurance industry, as a whole, updates its financial models in order to begin factoring in the possible effects of climate change. The insurer notes that climate-related disasters have caused more than $200 billion in damage over the past decade.
