Gerhard Berz

Climate change - Modest warming, dramatic effects

The unusually hot summer of 2003 in Europe will not remain an exception. On the contrary, extreme weather events could become the norm. Adjustment and preventive strategies are therefore more urgently required than ever before.

Observed throughout the world in recent decades and clearly reflected in the claims burdens of the insurance industry, the increase in natural catastrophe losses is one of the first and strongest pieces of evidence that the impact of global environmental changes generated by human activity is growing.

There is a broad consensus on this, be it in business and science or in the political arena, the media, and the general public. This consensus is largely due to the unmistakable accumulation of weather-related natural catastrophes like windstorms, floods, severe weather events, heatwaves, and forest fires.

The reason is that they are nearly always attributable to exceptional and often unprecedented extreme values for such meteorological parameters as temperature, rainfall, and wind speed. This is seen nowhere better than in the statistics and analyses of natural catastrophe figures which Munich Re has been publishing for many years on the basis of its indepth global surveys.

They show, for example, that only 16% of the approx. 14,000 natural catastrophes analysed between 1980 and 2003 (cf. Fig. 1) were earthquakes or volcanic eruptions. These are natural hazard events that have their origins in the interior of the earth or its crust beneath our feet. They cannot be influenced by mankind — as far as we know (and hope) — apart from possibly a few earthquakes induced by mining operations and reservoirs. The large remainder, five out of six natural catastrophes, originate in the atmosphere.

Weather extremes in all their manifestations at the upper and lower end of the probability distributions are particularly critical. They are rare occurrences with which we humans have little practical experience, so that we are poorly prepared to deal with them. This makes it so painful when — metaphorically speaking — the "tail of the probability distribution strikes".

It is also reflected in the damaging effects of these extreme events, be it the number of victims (weather events accounting for no less than twothirds of all victims of natural catastrophes), economic losses (more than three-quarters or US$ 1,000bn), or, most especially, insured losses (90%), on which the high penetration of windstorm insurance has a particularly large impact.