Presentation on theme: "CLIMATE CHANGE AND TRENDS OF NATURAL DISASTERS – WHAT IS TO BE DONE Peter Hoeppe Geo Risks Research/Corporate Climate Centre 2 nd Conference of the OECD."— Presentation transcript:
CLIMATE CHANGE AND TRENDS OF NATURAL DISASTERS – WHAT IS TO BE DONE Peter Hoeppe Geo Risks Research/Corporate Climate Centre 2 nd Conference of the OECD International Network on the Financial Management of Large Scale Catastrophes
Munich Re Insurer for Insurances Founded 1880 One of the leading reinsurance companies Covering risks of natural hazards is part of the core business 2
Origins and Types of Natural Catastrophes Extraterrestrial: Meteorites Geophysical (terrestrial): Earthquakes, volcano eruptions, tsunamis Atmospheric (weather): Windstorms, floods, storms, hail, lightning, avalanches, mud slides No human influence Pieces of evidence for human influence, risk of change!
Trends of Natural Disasters Intensities The last years have brought records in natural disasters in respect to: Frequencies Damages and losses 5
Heat stress Cold stress light extreme high moderate light comfortable moderate high extreme Perceived Temperature on 8 August 2003 and excess mortality Sources: Robine et al., 2007; German Weather Service, Heat wave of 2003, with more than 70,000 fatalities the largest humanitarian natural catastrophe in Europe for centuries
Hurricane Katrina, USA (1.322 fatalities) Insured losses (US$ m): Economic losses (US$ m): (NFIP included) source: AP August 2005 – Hurricane Katrina 6th strongest hurricane, largest losses of a single event 7
July 2005 – Mumbai Flood On 26th July 2005 the meteorological station at Santacruz in North Mumbai (India) recorded 944 mm of rainfall within 24 hours, the highest ever in the history of precipitation recordings in India. Insured losses (US$ m): Economic losses (US$ m): Fatalities: 1150
Flood series in the UK, June- July 2007 Largest flood loss ever! Source: Overall losses: > US$ 8 bn Insured losses: US$ 6 bn Overall losses: > US$ 8 bn Insured losses: US$ 6 bn 9
Climate change probably has a significant impact on increases of nat cat losses, especially in North America and Asia/Australia. GlobalNorth America EuropeAsia/ Australia 1980 – 2007 Nat cat loss trend (% p.a.) Climate component (% p.a.) 4516 Comments These data are indicative only – a more precise determination of the regional loss drivers related to climate change is needed (e.g. via LSE cooperation) Nat cat loss trend: growth rates of original/nominal values and not adjusted for inflation Climate component: actually Climate plus X because influencing factors include anthropogenic climate change, natural climate variability, changes in vulnerability and changes in population distribution Annual growth rates of nat cat losses and climate component 16
Black lines: decadal averages of observations Blue band: 5-95% range 19 simulations from 5 climate models using only natural forcings Red band: 5-95% range for 58 simulations from 14 climate models using natural and anthropogenic forcings Quelle: IPCC FoAR, 2007 Global Warming is Real! Continental Temperature Changes 17
very likely > 90% likely >66% more likely than not > 50% Climate Change and Extreme Weather Events (IPCC, 2007) 18
Trends of heavy precipitation events during summer monsoon in India Source: Goswami, B. N. et al. (2006), Science 314
Increase of Sea Level for different CO 2 -Scenarios *Basis: Range of ΔT = 1.5º-5.8ºC (IPCC TAR) Quelle: Rahmstorf (2007), Science, 315, 368 A1FI B1 140 cm 50 cm
Observed changes in sea surface temperatures NATL = North Atlantic WPAC = West Pacific SPAC = South Pacific EPAC = East Pacific NIO = Northern Indic SIO = Southern Indic Source: Webster et al. (2005), Science,
Residence Time of Greenhouse Gases in the Atmosphere Greenhouse gas Value 1750 [ppm] Value 2007 [ppm] Human share [%] Residence time [years] Relative green- house potential Share human GHE [%] CO 2 (Carbon dioxide) CH 4 (Methane) N 2 O (Nitrous oxide) CFCs (Chlorofluoro- carbons) SF 6 (Sulphur- hexafluoride) <1 H 2 O Water vapor 1-3 few days2 Source: IPCC, diverse
Desertec Industrial Initiative (DII) 12 companies signed a Memorandum of Understanding to establish a Desertec Industrial Initiative (DII). The objective of this initiative is to analyse and develop the technical, economic, political, social and ecological framework for carbon-free power generation in the deserts of North Africa.
Insurance Linked Adaptation to Increasing Weather Extremes in Developing Countries Munich Climate Insurance Initiative (MCII) MCII was founded in 2005 on initiative by Munich Re Today MCII is a registered non profit organisation with members from: Insurance, NGOs, Relief Organisations, Research Institutes, World Bank and independent experts. Objectives: Develop insurance-related solutions to help manage the impacts of climate change in developing countries. Recent activities: MCII-Submission to UNFCCC with concrete suggestions of insurance tools to be implemented in a Post-Kyoto-Protocol. Suggestions are being discussed by delegates of the climate negotiations on their way to Copenhagen. MCII
The MCII Proposal Prevention Pillar High Layer RISK Middle Layer RISK Low Layer RISK TIER 1 Climate Insurance Pool TIER 2 Support for micro and macro insurance systems Insurance Pillar RISK MANAGEMENT MODULE The two-tiered insurance pillar Meets the principles set out by the UNFCCC Provides assistance to the most vulnerable, and Includes private market participation. Premiums paid by AF ($5 bn) Support financed by AF ($2 bn) Support financed by AF ($3 bn) Rough estimated annual costs: $ 10 bn RISK MANAGEMENT MODULE Prevention Pillar Insurance Pillar Low Layer RISK mainly TIER 1 Climate Insurance Pool TIER 2 Support for micro and macro insurance systems High Layer RISK Middle Layer RISK
Evaluating the economics of climate risks & opportunities in the insurance sector Main areas of research activities quantifying the costs of a climate-related increase in natural catastrophes dealing with the uncertainties of climate models evaluating the potential and consequences of emissions trading systems and the appropriate design of such schemes estimating the economic impacts of climate change on the BRIC states (Brazil, Russia, India, China) Institute: Centre for Climate Change Economics and Policy at LSE Chair: Lord Nicholas Stern Management: Prof. Rees (LSE), Prof. Gouldson (Leeds) Project duration: Sponsoring:£3m (~ 4m) Collaboration between Munich Re and the London School of Economics 30
Conclusions Natural catastrophes, especially weather related events, are increasing in number and magnitude especially in Asia. There is more and more scientific evidence for causal links between climate change and increasing frequencies and intensities of natural catastrophes. Global warming is real. We have to mitigate global warming and adapt to the changing risks in respect to the regionally specific risk patterns. In Copenhagen ambitious CO 2 -reduction targets should be fixed to avoid dangerous, unmanageable climate change. The insurance industry supports climate change mitigation and adaptation measures by sharing its knowledge with the public and providing custom made covers for innovative technologies. 31 The Copenhagen outcome should provide adaptation funds for developing and emerging countries, including new insurance solutions.