Insurance can help in the face of increasing climate risks

Despite the terrorist attacks, heads of state and government have journeyed to Paris to attend the climate conference in Paris, demonstrating that they take the problem of climate change seriously. But this major event will probably fail to achieve its original aim: a binding agreement to limit global warming to two degrees.
The declarations of the world's leaders may sound good and convincing, but well-intentioned appeals are not sufficient. It is imperative that the conference deliver tangible results if we are to prevent devastating consequences, especially in developing countries and emerging markets. But even industrialised countries will experience more extreme weather in the form of heatwaves, windstorms, severe thunderstorms, flooding and hail. According to Munich Re's records, the number of weather-related natural catastrophes worldwide that have resulted in losses has almost tripled since 1980.

Rather than chasing international agreements, we ought to be consistently promoting innovative, climate-friendly technologies. Chancellor Merkel addressed this in her opening address. However, massive investments in fundamental research and the development of renewable energies and storage technologies are needed if progress to the next level is to be made more quickly and the technologies are to become cheaper and more reliable.
Funding open to all types of technology would make the market more dynamic and promote the most efficient technologies. Fossil fuels could be pushed out of the market simply on cost grounds. Of course, subsidies for fuels that cause climate change should subsequently be reduced – courage will finally be necessary here. It is clear that climate change cannot be stopped with loose change alone. But doing nothing will surely prove to be the most expensive option.

Whatever happens, we have to adapt to the inevitable consequences of climate change. And the most badly affected countries in Asia, Africa and Central America will require help, as they cannot do it alone. The West has good reason to provide this support, since no one wants to see a further stream of refugees as a result of climate change.
Insurance can help in the face of increasing climate risks. The G7 nations want to use insurance to protect an additional 400 million people against drought, flooding and similar dangers by 2020. A good example is the African drought pool, which paid out US$ 26m in Mauritania, Senegal and Niger in its first year alone. Munich Re is involved here and in further programmes in the Caribbean and Pacific. Paris ought to take further steps to improve the prospects of those hit by natural catastrophes.