The physical and financial impacts of climate change are accelerating, according to the World Meteorological Organization, who says that record greenhouse gas concentrations are pushing global temperatures towards increasingly dangerous levels.
The impacts and effects of climate change on the frequency, intensity and overall occurrence of severe weather related catastrophes and storms is accepted and with the accelerating impacts come increasing exposures and ultimately potential costs in terms of losses for insurance, reinsurance and insurance-linked securities (ILS) interests.
The latest WMO report on the State of the Global Climate in 2018 explains that the world has experienced record increases in sea levels, as well as exceptionally high temperatures over land and oceans over the past four years.
The WMO highlights this as a warming trend that began at the start of this century and which it expects to continue.
“Since the Statement was first published, climate science has achieved an unprecedented degree of robustness, providing authoritative evidence of global temperature increase and associated features such as accelerating sea level rise, shrinking sea ice, glacier retreat and extreme events such as heat waves,” commented WMO Secretary-General Petteri Taalas.
Climate indicators that are tracked have been on the rise, with carbon dioxide levels having risen from 357.0 parts per million in 1994 when the State of the Global Climate report was first published to 405.5 parts per million in 2017. The WMO expects that greenhouse gas concentrations will increase further in 2018 and 2019.
Taalas explained that the WMO believes the effects of climate change are seen in more severe storms and increasing climate impacts from weather and climate related catastrophes.
“Extreme weather has continued in the early 2019, most recently with Tropical Cyclone Idai, which caused devastating floods and tragic loss of life in Mozambique, Zimbabwe and Malawi. It may turn out to be one of the deadliest weather-related disasters to hit the southern hemisphere,” Taalas explained.
Continuing, “Idai made landfall over the city of Beira: a rapidly growing, low-lying city on a coastline vulnerable to storm surges and already facing the consequences of sea level rise. Idai’s victims personify why we need the global agenda on sustainable development, climate change adaptation and disaster risk reduction.”
2019 so far has seen record daily winter temperatures in Europe, severe cold in North America and extreme heatwaves in Australia. Arctic and Antarctic ice extent has also fallen well below average, the WMO says.
Above average sea surface temperatures, partly due to the weak strength El Niño in the Pacific, are expected to drive land temperature also above normal, particularly in tropical latitudes, in the coming months.
UN Secretary General António Guterres commented in the WMO report, “The data released in this report give cause for great concern. The past four years were the warmest on record, with the global average surface temperature in 2018 approximately 1°C above the pre-industrial baseline.
“These data confirm the urgency of climate action. This was also emphasized by the recent Intergovernmental Panel on Climate Change (IPCC) special report on the impacts of global warming of 1.5°C. The IPCC found that limiting global warming to 1.5°C will require rapid and far reaching transitions in land, energy, industry, buildings, transport and cities and that global net human-caused emissions of carbon dioxide need to fall by about 45% from 2010 levels by 2030, reaching net zero around 2050.”
In 2018 nearly 62 million people were impacted by events associated with extreme weather and climate factors, the report explains.
Floods impacted over 35 million people, making them the most widespread in terms of human effects, and there were fourteen “billion dollar disasters” in 2018 in the United States of America (USA), resulting in more than US $49 billion in damages and over 100 deaths.
Over 1600 deaths were linked to intense heat waves and wildfires in Europe, Japan and the USA, resulting in record economic damages of nearly US $24 billion in the USA alone. Meanwhile, the Indian state of Kerala suffered the heaviest rainfall and worst flooding in nearly a century.
In addition, food insecurity and displacement of people due to climate related events rose, with droughts, floods and storms the major causes.
The report provides a stark look at the issues facing the planet as our climate changes. Human induced or otherwise, climate change and variability is a serious issue, particularly in coastal regions, hotter countries and for the emerging economies of the world.
For insurance, reinsurance and ILS interests the continued increases in climate and warming related factors does suggest rising exposures, particularly in coastal areas and regions particularly exposed to storms.
Tropical storms and severe convective weather severity are expected to increase by many climate scientists, while hotter and drier weather could cause increasing wildfires, and sea level rise threatens to make areas of coastline all but uninsurable.
Pricing the risk of increasing damage due to severe climate events into insurance and reinsurance contracts is key, as to is keeping the risk models updated with the latest climate related insights, up to date exposure data and scenarios to enable risk commensurate pricing.
As Bank of England Governor Mark Carney explained recently, insurance, reinsurance and ILS companies are on the “front line of managing the physical risks from climate change” and are now aware that “yesterday’s tail risk is closer to today’s central scenario.”
We’re returning to Singapore for our fourth annual ILS market conference for the Asia region. Please register today to secure the best prices. Early bird tickets are still on sale.