The speed at which oceans are warming could see parts of the world become uninsurable if climate change is not checked, warned the Geneva Association, a global insurance think-tank, adding that governments need to invest more in flood defences and tighten building restrictions in risky locations to mitigate the fallout from extreme weather hazards.
The speed at which the oceans are warming is threatening insurers’ ability to sell affordable policies in a growing number of places around the world, forcing insurers to change their assessment criteria for the risk of natural disasters hitting a specific area, said the Geneva Association on Monday.
“Traditional approaches, which are solely based on analysing historical data, increasingly fail to estimate today’s hazard probabilities,” said the industry group in a report.
"A paradigm shift from historic to predictive risk assessment methods is necessary," it stressed, adding that the insurance industry needed to support scientific research to gain a better understanding of when and where weather-related disasters will hit.
The report from the Geneva Association here: Warming of the oceans and implications for the (re)insurance industry
In some high-risk areas, ocean warming and climate change threaten the insurability of catastrophe risk more generally. To avoid market failure, the coupling of risk transfer and risk mitigation becomes essential.
Interesting that the term 'market failure' is used given that market failure in the tropical strata market was denied by the Insurance Council. A search on the recent Coalition 2030 Vision for Developing Northern Australia reveals not a single occurrence of the word "insurance" in the 46 page document?