Source Url:
http://in.reuters.com/article/idINIndia-51317620100906
Four associations on climate change initiatives, which represent over 100 insurers, have urged world leaders and governments to use insurance-linked products to protect developing countries against the impact of climate change.
As the world wrangles over how to fight climate change, insurance think tank the Geneva Association, along with insurance industry lobby groups ClimateWise, the Munich Climate Insurance Initiative (MCII) and the United Nations Environment Programme Finance Initiative (UNEP FI), called for global governments to use better risk management and insurance-type approaches to reduce the vulnerability of developing countries from natural disasters.
The insurance industry, including reinsurers, who distribute risk around the sector, has traditionally been the main way to hedge against hurricanes, floods and other national disasters.
Insurers have also looked to transfer risks associated with natural disasters to capital markets investors - such as catastrophe bonds. Last year, Swiss Re teamed up with the World Bank to issue a $290 million cat bond to cover against earthquakes and hurricanes in the city.
The risks of developing world will become the risks of developed world if we do not engage, Vanessa Otto-Mentz, head of the strategy unit at Santam, a member of ClimateWise told a news conference in London on Monday.
The associations, which represent insurers such as Munich Re and Allianz Insurance, want global government's to use the knowledge and expertise from the insurance industry to encourage national risk management processes in developing countries, particularly those most vulnerable to the impacts of climate change.
In addition, the group urged the development of new insurance products, which cover risks affected by climate and weather events, such as human health, crop yields and animal diseases.
"We have an opportunity to reduce significant human and economic suffering through loss prevention and risk transformations," said Walter Stahel, the deputy secretary general at the Geneva Association.
He called on governments to invest in systemic, systematic and reliable risk data, which is lacking in developing countries and to engage in public/private partnerships to provide cover for catastrophe risk and micro insurance.
"The insurance industry has the tools and knowledge - now we need the heads of government to provide the framework and conditions in order for these instruments to function," he added.
Over the past three decades, direct global economic losses for all types of natural catastrophes have averaged $90 billion per year, with 78 percent of those natural catastrophes being weather-related, according to the world's biggest reinsurer, Munich Re. Meanwhile, 85 percent of deaths associated with all natural catastrophes over that timescale have occurred in developing countries, said the reinsurer.
The four associations will lobby world leaders and negotiators of the United Nations Framework Convention on Climate Change.
