Using catastrophe to aid climate change

Although a large-scale catastrophe would be undesirable, it might nevertheless create an opportunity to upgrade to higher environmental standards, Lloyd’s CEO Richard Ward said during the COP15 United Nations Climate Change Conference in Copenhagen.
“People can choose to rebuild with energy efficiency in mind,” he told delegates, according to a copy of his speech. “They can make their assets resilient to the future climate.”
This does come at a cost, he added. Green appliances often cost more, and there is an increased cost associated with repairs of flood defences such as water-resistant membranes, airbrick covers, raising floors and anchoring foundations.
If a single insurer were to unilaterally force action on its policyholders, it would have to raise premiums to pay for green options, making them more expensive than their competitors.
“The solution we have hit on is unusual for any industry,” Ward said. “We are asking policymakers to regulate [and] to impose regulations on us [that] require rebuilding to be climate conscious.
“If regulation levels the playing field, we are confident that we will see real results. Without it, I fear we will only see marginal change from well-meaning policyholders.”