Canadian Underwriter

We are Doing Something About the Weather

April 1, 1999   by Paul Kovacs, executive director, Institute for Catastrophic Loss

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In January, more than two hundred of the world’s leading scientists met in Geneva to discuss what we should do about our changing weather. This gathering is part of an even larger working group that has been making steady research progress for more than ten years. But as each new storm passes, it reminds us that there remains a great deal more to do.

Some other questions we are working on include the following: What factors have lead to the increase in the frequency and severity of extreme weather? Are these climate changes due to human influences? What changes should we expect in coming years? Can we do anything to reduce the impact of climate change?

Insurers from Europe and Canada are represented in this process, the work increasingly having a positive impact on the actions taken in the business community and by governments. As decisions are made, however, it will take decades to resolve some issues. Nevertheless, I am optimistic that efforts achieved by working together will deliver positive results over the longer term.

The United Nations and the World Meteorological Organisation established the Intergovernmental Panel on Climate Change and Variability (IPCC) in the late 1980s. The official mandate of the panel is to study the available scientific information about climate change, assess its impact on the economy and society, and formulate response strategies. The scientific community was looking for a forum to discuss concerns about our changing weather. IPCC has filled this void by holding regular meetings, like the one in January.

The panel is also driving an international research and publication program. Much of this work is conducted and disseminated through the Internet. It is difficult to imagine how such a large group of people located around the globe could work together so effectively without this creative use of our modern communication technology. There has never before been such a large-scale research program, bringing together analysts from the full range of scientific disciplines to work cooperatively to resolve an international challenge.

Scientists with Environment Canada remain leading contributors to this project. IPCC have also been successful over the last few years in their efforts to involve more scientists from Asia, Africa and South America to provide a better balance to the continuing strong input from the U.S. and Europe.

During the early years, the project focused on clarifying the science of weather and climate variability. Almost immediately a consensus emerged in the scientific community that the world’s climate is changing because of human intervention. The research also confirms that these changes are complex and the impact is material, including the impact on insurers.

Warming hot spots

Exhaust emissions from the use of fossil fuels to power vehicles, heat homes and operate factories are an important contributor to climate change. Population growth, urbanization and industrialization are also contributing factors. The result is global warming, where temperatures move higher, rising above the long-term cyclical changes and contributing to a variety of other changes in climate.

Warming is mostly evident near the Arctic and Antarctica, including Australia, Russia and northern Canada. It is less evident near the equator. Warming is also most evident in the evening, while there is a smaller change taking place in daytime temperatures. Within our oceans the change in temperatures is greatest a few hundred metres below the surface. Similarly air temperature changes are greatest a few hundred metres above sea level, and lower near the sea, or at very high elevations. Last year was the warmest on record, signifying that the pace of warming is rising.

Liquids expand and require more space as the world grows warmer, including expansion of the ocean waters. Accordingly, sea levels are rising – at the current rate of warming several island nations will be completely below sea level in a few decades as well as much of coastal Florida and low lying regions in Europe. The combination of rising sea levels, more storm activity, and more people living in vulnerable communities has lead to increasing sea-surge damage around the globe.

A warmer world means more of our water remains in the air. This aggravates the number of heavy and prolonged rainstorms. The frequency and severity of hailstorms and winter storms are also rising.

At the same time, there has been a decrease in the number of small rainstorms, and an increase in the frequency of drought and brush fires. In many ways, global weather is becoming dangerous, including increasing risk of a number of insured perils – storm damage, hail, flash flooding, fire, and sea-surge.

International planning

The IPCC has provided an international forum for scientists to project future changes in a rigorous setting where assumptions are tested and retested. Some studies look several hundred years into the future, although most focus on the next fifty years. Other reports seek to provide climate forecasts for specific parts of the world.

Some research seeks to better include long term climate variability through factors like El Nino models. The work has increasingly been directed to the analysis of options for reducing the pace of climate change. That said, elements of global warming are helpful, like the longer growing season across Canada. But there are many aspects that are dangerous and unwelcome. All participants agree that we should work to avoid bringing further large changes in the weather.

Some of the challenges here are very daunting. For example, actions taken in one region immediately affect the world’s climate systems, so international planning and programs are needed.

However, past experience shows that international agreements take a long time to put together. As decisions are made, there are considerable lags before there is a favourable impact on the weather. We can still expect sea levels to rise for several hundred years despite adopting aggressive measures today in reducing energy exhausts globally.

Role of insurers

Insurers are not experts on energy use or emission controls. The insurance industry does not plan to also show leadership in the debate about long-term strategies to control international greenhouse gas emissions. These are important discussions and insurers are pleased to observe the increased importance that has been given to this work.

The contribution of the insurance industry to the broader effort is to focus attention increasingly on extreme events.

We need more research into the science of severe weather, and more work to develop ideas for adapting to our increasing vulnerable world. The insurance community is also pressing that these be treated as immediate needs, as severe weather is happening right now, and we must learn to better manage this risk before it causes even greater loss of life and property damage.

In Canada, the Insurance Bureau of Canada (IBC) is leading the lobby to establish a national mitigation strategy. There will be public hearings across the country this year to debate our proposal. We believe that governments should invest $60 million to $100 million a year in projects that will protect Canadian homes and businesses from our increasingly dangerous weather.

The Winnipeg floodway and the Alberta weather modification program are two examples of the kinds of investments that should be put in place across the country. Modest investments in protection will reduce the annual $500 million cost to governments of disaster recovery. Catastrophic loss payments by insurers are also high and rising, and would directly benefit from a mitigation strategy.

Canada’s insurers have also established the Institute for Catastrophic Loss Reduction (ICLR). This is a forum for insurers to work more actively with the research community and others to better understand severe weather and options for managing this risk. There is an active program of workshops and conferences that the Institute has developed to help insurers to become more
informed about extreme events.

The first report of the IPCC was published in 1990. It was updated in 1995 with more detailed information about climate change in specific countries. Currently we are writing the third report that will be completed next year. This work of the scientific community to explain the factors that are changing our climate is increasingly taking a form that can be directly applied by insurers and governments. The volume of research on extreme weather events is increasing, although this will likely be most evident in the 2005 IPCC report because much of this information is very new and still emerging.

The Canadian insurance community is growing increasingly aware of the importance of this work to understanding the factors changing our climate. Participation in the work of the ICLR is one means to stay informed about the emerging research and how it can be applied to the risks managed by Canada’s insurers.

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