Bloomberg reports on how climate change is likely to increase insurance costs in the Caribbean:
Climate change may add 50 percent to the storm damage costs incurred by some Caribbean nations over the next two decades, said Swiss Reinsurance Co., the world’s second-largest re-insurer.
Wind, storm surges and inland flooding already cost some Caribbean nations up to 6 percent of their economic output each year, the Zurich-based company said today in a statement on its website. Global warming could add costs amounting to another 1 to 3 percent of output by 2030, it said.
Insurers are being hit with more claims as damages from natural catastrophes rise. Costs to clean up after storms and other natural disasters reached a record $180 billion in 2005, of which insurers covered about half, according to Munich Re, the biggest re-insurer.
“As a global re-insurer. we are already exposed to the effects of climate change,” said David Bresch, Swiss Re’s head of sustainability. “Projected climate patterns are likely to heighten the risks.”
Swiss Reinsurance Co also offers advice on steps that could be taken to reduce these risks:
Swiss Re said territories have a range of options open to them to reduce the risk of damage. The Cayman Islands could “cost-effectively avoid up to 90 percent of expected losses” by building sea walls and enforcing construction codes, the re- insurer.said, citing the study. In Dominica, just 2 percent of the possible damage could be avoided cost-effectively using such measures, it said.
Read the complete article at bloomberg.com.
Also of interest is the wesbite of the Caribbean Catastrophe Risk Insurance Facility (CCRIF). The CCRIF recently released a brochure summarising the early results of a study on the Economics of Climate Adaptation (ECA) in the Caribbean:
n releasing the results, CCRIF Chairman Milo Pearson indicated that they will “enable countries in the region to develop fact-based adaptation strategies that can be incorporated into national development plans to increase resilience against climate hazards.” The results for eight pilot countries (Anguilla, Antigua and Barbuda, Barbados, Bermuda, the Cayman Islands, Dominica, Jamaica, and St. Lucia) are presented in a short brochure entitled, Enhancing the climate risk and adaptation fact base for the Caribbean (Preliminary Results).
The ECA study, launched in February this year, was conducted by CCRIF, with Caribbean Risk Managers acting on behalf of the Facility, and supported by regional partners, the Caribbean Community Climate Change Centre (5Cs), the UN Economic Commission for Latin America and the Caribbean and others. McKinsey & Company and Swiss Re provided analytical support.
The study has been welcomed by Caribbean countries which realise that climate change has the potential to greatly exacerbate their risks from hurricanes and storms. Findings from the study indicate that annual expected losses from wind, storm surge and inland flooding already amount to up to 6% of GDP in some countries and that, in a worst case scenario, climate change has the potential to increase these expected losses by 1 to 3 percentage points of GDP by 2030.
For more information see ccrif.org and the ECA Study Brochure [PDF].
[Photos: robert birkenes; Katie Mims]
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