LONDON (Reuters) - Insuring the effects of climate change is still possible anywhere in the world “at the right price” despite increasing natural catastrophes such as hurricanes, reinsurance group Munich Re said on Wednesday.
Natural catastrophes resulting in insurance losses of more than $500 million more than doubled in 2008 from 1980, the group said. Most of these can be wholly or partly attributed to the effects of climate change.
In 2008, it is estimated that Hurricane Ike in the U.S. state of Florida resulted in $11.5 billion of insurance losses.
“So far, nowhere in the world is uninsurable,” said Georg Daschner, member of the board of management at Munich Re. “It is a question of getting the right price and whether people are prepared to pay that price.”
Daschner said the company was getting “close to its limits” in Florida, but is seeking ways of passing on its risk exposure to the capital market.
“At the right price there is always a way of insuring. The question is whether the consumer wants to pay that price,” he added.
Munich Re provides cover for insurance companies and tries to cushion heavy losses by assessing the risks of climate change and investing strategically, for example in renewable energy.
The company was unable to put an exact figure on how much climate change is likely to cost insurers as its effects worsen, but said it currently deals with risks worth “billions and billions of dollars.”
“We don’t expect any big tipping points in risk insurance over the next 20 years. There will be a steady, slow change. We can manage this as we renew contracts every year and we can adapt them to new findings on climate change,” Professor Peter Hoppe, Head of Munich Re’s Geo Risks Research unit, said.
Munich Re said companies are becoming more aware of the effects of climate change on where they locate their businesses and use Munich Re to assess such risks.
“They are thinking about what will happen in the future, not looking for insurance particularly. Picking the right location is the best way of risk prevention. We can contribute to that as we give risk a price tag,” Andreas Siebert, head of Geospatial Solutions at Munich Re, said.
Reporting by Nina Chestney; Editing by Rupert Winchester