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A safer, unpolluted world for future generations: European insurers and climate change

Daniel SchantéDirector General

Comité Européen des Assurances (CEA)

ABI International Climate Change ConferenceLondon, 29 June 2005

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Climate change

• I. Impact on insurance

• II. European institutions initiatives (examples)

• III. Reinsurance and insurance initiatives

• IV. CEA initiative

• V. CEA reflections

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I. Impact on insuranceMany insurance classes affected:

Property.Health/life.Agricultural insurance (animals, crops).Construction.Professional risks (business interruption).Transport (marine and aviation).Even motor.

Natural catastrophe losses:

Source: Munich Re, Topics Geo 2003 and 2004

$60bn $15

bn

$145bn $44

bn

2003 2004

Economic lossInsured loss

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II. European institutions initiatives (examples)European Climate Change Programme (ECCP)

March 2000

Approval of the Kyoto Protocol on climate change

Council Decision April 2002

The European Union Solidarity Fund

Council Regulation November 2002

Greenhouse gas emissions allowance trading scheme

Directive of the European Parliament and of the Council October 2003

Communication from the Commission “Winning the battle against global climate change”

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III. Reinsurance and insurance initiatives

Reinsurers’ initiatives (1)

Publication of communication papers.

Participation in initiatives aimed at reducing the emission of greenhouse gases.

Participation in worldwide projects (cooperation with IPCC -Intergovernmental Panel on Climate Change and UNEP - UnitedNations Environment Programme …).

Search for new products, new technical tools in order to estimatepotential losses.

Insurers’ initiatives linked to natural events

Existing systems in terms of natural catastrophe cover

Involvement in climate change issues.

(1) Swiss Re and Munich Re

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Natural catastrophe cover schemesSTATE INTERVENTION:

State imposes cover as an extension to a basic

contract:

Switzerland

State pays compensation for loss or damage:

Denmark, Netherlands

State intervenes bothways:

Belgium, Spain, France, Norway

NO STATE INTERVENTION:

Austria, Czech Republic,Germany, Finland, United Kingdom, Greece, Italy,

Poland, Portugal, Sweden

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Insurers’ initiatives linked to climate change issues

Various initiatives: UK

Insurance project: Italy

Mapping and zoning (floods):

Austria, Czech Republic, Germany, Poland (also Italy)

Agreement between household insurers and

construction sector insurers:

France

Studies/academic projects (support or funding):

Spain, Norway, (also Austria, Poland)

Awareness:

Switzerland, Denmark, Greece

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IV. CEA initiative

Questionnaire on natural event cover for individuals.

Three relevant points:

Compulsory versus optional insurance.

Penetration of the insurance cover for each type of risk.

Available reinsurance in the different countries.

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V. CEA reflections1) Limitations of traditional insurance.

2) Priority: mitigation and adaptation.

Need for prevention measures to be taken:

Sustain the Kyoto ProtocolPromote renewable energies.Use of geographical information systems.Early warning system.Flood control programs.Building codes (wind-resistant construction techniques).

3) Partnerships between governments/European institutionsand the private sector.

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Beyond worrying about who will bear

the costof climate change,

public authorities, business and insurers should concentrate on

prevention.

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A safer, unpolluted world

for future generations!

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