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October 17, 2004

Global warming and insurance

Ice_capThe world's second-largest reinsurer Swiss Re warned on Wednesday that the economic costs of natural disasters, aggravated by global warming, are threatening to spiral out of control and could double to $150 billion (82 billion pounds) a year in 10 years. This file photo shows the world's highest ski slope, located in the Bolivian Andes, where scientists say the ice cap that attracts hundreds of tourists each year will disappear in less than five years, likely due to global warming.

The majority of actuaries work within the financial services sector, where they are ‘making financial sense of the future’, concerned with medium- to long-term financial problems. Climate change will have a definite effect on the work of actuaries. Their work in insurance companies, pension funds, or the banking and investment sectors gives them a crucial role in the central dilemma of whether to pursue adaptation to climate change or mitigation.

On a ten-year view, the frequency of weather disasters has tripled since the 1960s and insured losses have risen ten-fold, according to Munich Re, the world's largest reinsurer.

"There is clear evidence that the climate is changing in a way that makes future predictions much more problematic and inexact," RICS says. "And in recent years there has been an increasing number of properties inundated for the first time."

Louis Perroy discusses the phenomenon of climate change and its effect on actuaries

Another article on the issue, and another.

Posted by Tom Troceen