Properties in cities and towns prone to persistent flooding, such as Cologne in Germany or Clonmel, Co Tipperary, will soon become uninsurable because of the onset of climate change, a leading insurance executive warned yesterday. Frank McDonald, Environment Editor, reports from Milan
Mr Thomas Loster, head of weather risks research with Munich Re, one of the world's biggest reinsurance companies, said people in such locations would only be able to get insurance for premiums they would find unacceptable.
Preliminary estimates given by Mr Loster at the UN's ninth climate change summit show that natural disasters in 2003 - the vast majority weather-related - would cost the world more than €50 billion - €4 billion more than last year.
The extreme summer heatwave across Europe, which claimed the lives of 20,000 people and caused serious damage to crops and livestock, is expected to be the most costly event of 2003, with agricultural losses alone exceeding €8 billion.
The second most costly event is likely to be the floods in China between July and September, which damaged 650,000 homes. Overall losses there are estimated at €6.5 billion, of which virtually none was insured.
In terms of insured losses, the biggest pay-outs of 2003 relate to a series of tornadoes which ripped through the US mid-west in April and May, leaving a trail of destruction in their wake. Claims come to a total of more than $3 billion.
Mr Loster characterised the European heatwave as something that should happen only once in 450 years. However the onset of climate change had increased the frequency of extreme weather conditions throughout the world.
"Compared to the 1960s, there were 3.6 times more weather-related disasters during the past decade. Over the same period, economic losses have increased by a factor of six and insurance losses by a factor of 10", he told a press briefing.
But Mr Loster said there was no doubt that climate change would "drive up" losses even further. "We need to act now to stop global warming. The problem is clearly visible and we can see it in our own day," he said.
One of the ways insurance companies could reduce their exposure, he suggested, was to increase their "deductibles" threshold above €500. As most claims were below that figure, this would reduce their costs by more than half.
Mr Klaus Toepfer, executive director of the UN Environment Programme, welcomed the insurance sector's participation, saying "climate change is not a prognosis for the future but something that's happening now".
Mr Toepfer has just spent four days in the Artic aboard a Norwegian ship, to see what he described, along with the Antarctic, as "one of the Earth's early warning systems" and witness the "really threatening" erosion of its ice cover.
The Inuit people of Alaska and Canada are planning to take legal action against President Bush for the destruction of their habitat due to the US government's refusal to ratify the Kyoto Protocol.