Regardless of the causes of climate change, extreme weather is becoming more common and the insurance industry needs to step up to minimize the impact, notes a new paper from General Re chairman and CEO Tad Montross.
“My own view is that we should be deeply concerned about CO2 and the buildup of greenhouse gases even if we can’t make the connection to global warming,” Montross wrote in the February 2013 paper, titled Extreme Weather.
Leaving causes aside though, recent temperature peaks and weather events are cause for concern, he suggests.
Montross cites examples such as September 2012 being the warmest September on record for the globe, severe hurricanes and typhoons striking recently, and extreme flooding in many parts of the world.
“These patterns may well be consistent with 60 or 70 year cycles, but the reality is our industry needs to be responsive to them,” he wrote. “We can’t wait 60 years.”
Among other strategies, the property and casualty industry should be working with insureds on risk mitigation, as well as focusing on developing better flood maps.
“We need to recognize the limitation of Cat models and appropriately calibrate and sensitivity-test them,” he noted, adding that the industry should be analyzing both modelled and non-modelled perils.
The full paper is available on Gen Re’s website.