Opinion: "No change in underwriting"

"Neither civil jurisdiction nor tort law is suitable for dealing with the direct consequences of climate change", is how Heike Trilovszky, Head of Corporate Underwriting, summarises the current discussion on this subject.

The USA is witnessing an increasing number of lawsuits related to the effects of global warming, albeit with scant chance of success. Why has Munich Re chosen now to state its position on the topic of "climate litigation"?

Heike Trilovszky: This topic is the subject of mounting public concern, especially in the USA, but the discussion at the moment is simply too emotional. As a global reinsurer, it is our job to consider such issues in a more matter-of-fact way. Our clients are also keen to hear our views on the subject. Ultimately, climate change and its consequences are an important strategic topic for Munich Re. This is why we have to look at all the aspects involved.

Munich Re was one of the first companies to warn about the consequences of climate change.
Do you not welcome the idea that those at least partly responsible for climate change should be held liable?

Trilovszky: Happily, politicians are now taking climate change seriously and there is broad international agreement that global warming needs to be stopped. But civil law is not the right way to solve this problem. It needs to be tackled at a socio-political level.

How?

Trilovszky: This has to be decided by society and its political representatives, above all the legislature. In our opinion, tort law is a wholly unsuitable vehicle for this purpose – an opinion, incidentally, that US courts share with us.

Is there any need for Munich Re to take action in terms of ist underwriting practice, such as introducing new exclusions?

Trilovszky: For now – no. Insuring the indirect consequences of climate change is part of our daily business, for example when a loss occurs due to a breach of reporting requirements or because someone fails to comply with his professional duties of care. This is insurable and will remain so. Nevertheless, we do examine whether climate litigation should be included in pricing considerations for certain classes of business. However, the direct consequences of climate change cannot, in our opinion, be addressed through tort law. Our current underwriting practice is therefore adequate. Should jurisdiction or legislation significantly change, however, modifications to our underwriting policy may indeed become necessary. After all, an incalculable risk is an uninsurable risk.

« back