Knowledge series: Highs and lows Weather risks in central Europe

Climate change in central Europe

The number of weather-related natural catastrophes is on the increase in Europe. There is growing evidence that this trend is already due in part to climate change. The latest IPCC report confirms that the climate is changing.

The mean global temperature is constantly rising. It has increased by 0.74°C in the last 100 years and by no less than 0.13°C per decade in the last 50 years – double the rate for the 100-year period as a whole. The rate of increase has been even more pronounced in Europe, with a rise of 0.95°C in the last 100 years, and as much as 1.0°C in Germany, 1.1°C in Austria and 1.4°C in Switzerland. The rise in temperature has been even more pronounced in the last few decades.

Munich Re was one of the first companies in the finance sector to draw attention to the problem, pointing out in a 1973 publication on flooding that the growing losses might be due to human-induced climate change. The 2007 IPCC (Intergovernmental Panel on Climate Change) report confirms the statements and warnings we have issued over the last three decades: it is more than 90% probable that climate-changing trace gases released into the atmosphere by human activity are the primary cause of the global increase in temperature. The IPCC also confirms our analyses indicating that climate change is already causing a greater number and higher intensity of weather extremes.

Climate change curbs economic growth

Sir Nicholas Stern’s report on the “Economics of Climate Change”, published in October 2006, addressed the financial impact of climate change. It predicted a reduction in annual global growth of at least 5%, or US$ 2,200bn, by the middle of this century. The Stern Review forecasts that the costs will be limited to 1% of annual global gross domestic product (US$ 445bn) provided we take corresponding action. Such action would enable us to remain below the critical dividing line of a 2°C increase in global average temperatures compared with pre-industrial levels. This objective will only be achieved if CO2 eq concentrations can be stabilised at 445–535 ppm by 2050. Some increase is inevitable due to growing emissions from emerging countries such as China and India.

It is also crucial that we finance steps to adapt to climate change impacts that can no longer be prevented. The insurance industry has a key role to play in this by providing solutions to deal with the financial losses.