Climate Change Under World Spotlight

Swiss Re’s latest sigma study on natural catastrophes and man-made disasters in 2007 concludes that they killed over 20,000 people and cost the insurance industry $70 billion, $28 billion related to property claims. 2007 wasn’t even “an exceptional year” in terms of either fatalities or losses, but statistics confirm the trend towards an increase in the number and cost of natural catastrophes and man-made disasters.

There were 142 natural catastrophes and 193 man-made disasters in 2007. Most of the fatalities were in Bangladesh, India, China and Pakistan. Europe was the worst hit by insured property losses. Major events included windstorm Kyrill, which caused losses of $6.1 billion across Germany, the United Kingdom, Belgium and the Netherlands, and the summer floods in the U.K., which cost $4.8 billion.

However, losses in the United States, which usually top the loss tables, were minor in comparison to previous years. The biggest event was the storms in April, which resulted in insured losses of $1.6 billion. The October forest fires in California resulted in just over $1 billion.

The complete report can be found at: www.swissre.com.

Reforming Lloyd’s is a priority for United Kingdom’s government. Exchequer Secretary to the Treasury, Angela Eagle MP, released a 64-page “consultation document” on March 7, outlining a series of proposals to modernize the Lloyd’s market. It’s a first step in a plan to overhaul the Lloyd’s Act of 1982 under which Lloyd’s operates.

Eagle stated: “The reforms I am proposing today complement the reforms that Lloyd’s itself has already put in place, and will help it continue to compete in the global insurance market of the 21st century. This consultation is a chance for anyone with an interest in the future of Lloyd’s to influence these proposals, and I welcome comments from all concerned.”

The consultation period closes May 30. The proposals include making it easier for any Lloyd’s Council member to become chairman and deputy chairman, and making it easier to become a member of the Council, which governs Lloyd’s.

Also in the works are proposals to make it easier for brokers to do business at Lloyd’s by removing the restriction that requires managing agents generally to accept business only from a “Lloyd’s broker.”

A Lloyd’s spokesperson said: “We welcome the Treasury’s proposals,” and described them as “an important package of measures that will help Lloyd’s comply with modern standards of corporate governance and develop our business without the constraints of outdated statutory restrictions.”

The G20 meeting in Japan brought together 20 of the world’s top greenhouse gas emitters — the United States, other G8 states, China, India and Brazil. They focused on funding clean energy projects and helping poor nations adapt to droughts, rising seas and more intense storms.

A number of environmental activists, however, warned that rich nations must come up with billions in new money to help poor countries fight global warming. Even as the talks were about to start, environmentalists spoke about poor nations’ disillusionment with the management and lack of consultation about the funds, a key element in the global fight against climate change.

“What seems to be happening is that you have three announcements from Japan, Britain and the U.S. that have now been combined into a World Bank special strategic climate fund,” said Jennifer Morgan of environmental institute E3G. She said “the multi-billion dollar scheme did not appear to have much new money, had left developing countries out of negotiations on how the money would be used until very recently, and had quite a number of conditions attached.”

United Nations-led talks in Bali in December launched two years of negotiations on a successor to the Kyoto Protocol (which the United States has refused to sign), whose first phase ends in 2012. Bali’s final draft called for rich countries to cut their own emissions and pay for costly clean energy projects, as well as providing more financial resources and investment for developing nations.

A U.N. report last year estimated the cost of returning greenhouse gas emissions to present levels by 2030 would be about $200 billion annually, through measures such as investing in energy efficiency and low-carbon renewable energy. “Even if these funds by the Japanese, the U.S. and Britain represented real, new money that totals about $14 billion over the next five years, or about 1 percent of the need,” Alden Meyer, Union of Concerned Scientists, told the briefing.