Global warming and insurance costs
Global warming to raise storm damage costs-insurers
By James Kilner
The group will call on leaders of the world's richest nations meeting in
"Governments now have a chance to make rational choices for the future, before it is too late," ABI's director of general insurance, Nick Starling, is set to tell a conference on Wednesday.
ABI members provide around 94 percent of
Damage costs from the three most expensive types of storms -- hurricanes in the
"Insurance acts as a messenger for the financial costs of climate change. Insurance is all about risk and assessing risk," ABI policy adviser, Sebastian Catovsky said.
The increasing cost of storm damage will have to be found in the international money markets, pushing up the cost of borrowing as demand grows, Catovsky said.
"This will have a knock-on effect both to capital markets and financial markets overall," he said.
The other members of the G8 are
But ABI said the final bill could be even higher as its estimates do not include population and infrastructure growth, damage to which would increase costs.
Two-thirds of the cost is covered by the insurance industry and it also needs to prepare for years when a flurry of storms combine to batter the globe.
"The important point is that that it won't even out every year," Catovsky said.
The insurance industry needs to build up its cash reserves to around $200 billion from $120 billion it currently holds to pay for years with severe weather, he said.