Reinsurers engaged in setting climate principles

Reinsurers Swiss Re and Munich Re have both been engaged in an initiative from the Climate Group called the Climate Principles.

The aim of the initiative is to set some guiding principles that provide a voluntary framework to guide the finance sector in tackling climate change. The principles aim to provide strategic direction on managing climate change across the full range of financial products.

Trading of weather derivatives is a key aspect of the initiative that will interest readers of this blog. It will be very good for the market if we can find ways to support climate change initiatives using the more exotic methods of weather risk management. For that reason it’s great to see reinsurers engaged at this stage.  Weather derivatives are being touted as a growth area for next year both from an investment perspecitve and from a market development perspective. Could 2009 be the year when weather derivatives grow up?