Monday, September 05, 2005

Climate change to hit UK insurance premiums

Climate skeptics? The insurance industry don't take any crap, its their money they are playing with! They seem convinced about climate change.

Published in the Independent: 05 September 2005

The cost of home insurance in Britain could soar in the aftermath of Hurricane Katrina, insurance companies are warning. The Association of British Insurers said its members were concerned that the hurricane was part of a pattern of global climate change in which incidents of severe weather would become more common, both at home and abroad.

Malcolm Tarling, an ABI spokesman, said: "We're not expecting an immediate premium increase directly as a result of Katrina, but the wider issue of climate change is beginning to have a very serious impact on insurers."

Katrina could cause some British home insurers difficulties. Although none of Britain's large general insurers have direct exposure to the Katrina disaster, they almost all insure themselves with the world's largest reinsurers, which will pick up part of the bill for the damage cause by the hurricane. These companies are expected to pass on their higher costs to customers.

However, Mr Tarling said the threat posed by climate change was much more serious. ABI research conducted on the basis of advice from climate experts suggests the global bill for property damage caused by incidents such as Hurricane Katrina could increase by two-thirds over the next 10 years unless immediate environmental action is taken.

In Britain, the value of weather-related claims reached £6bn between 1998 and 2003, twice the total in the previous five years.

Separately, the Lloyd's of London insurance market yesterday dismissed rumours that it has priced the cost of Hurricane Katrina to the insurance industry at $40bn.

A spokeswoman said: "It is far too early to say what this will cost - risk analysts have suggested the cost could be between $9bn and $50bn and the picture is very unclear."

Lloyd's has asked its members to give a preliminary estimate of their liabilities by 12 September.


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