Africa: Insurance Not Enough to Offset Financial Risks of Climate Change, Analysts Say

Feb 25, 2019 | Thomson Reuters Foundation; All Africa

Better understanding of the potential costs - and financial opportunities - of climate change and the shift away from fossil fuels is needed, experts say

From homeowners facing higher flood insurance premiums to investors putting money into coal-fired power plants, financial risks related to climate change are growing, analysts say.
But working out how a switch to lower-carbon train travel could affect an airline, or what an insurance firm should do to weather more flood claims is neither clear nor simple, they say. Help may be at hand, however, from guides published on Friday to assess financial risks from the physical threats of climate change, as well as the risks and opportunities of a global transition away from fossil fuels.
"What is the exposure financial institutions have to natural catastrophes? I do nott think that question traditionally has been asked," said Greg Lowe, global head of resilience and sustainability for Aon, a London-based insurance and risk firm. For disasters, "there is always been an assumption we have insurance for that", said Lowe, whose firm contributed to the reports by ClimateWise, an initiative of the University of Cambridge Institute for Sustainability Leadership that aims to better disclose and respond to climate-related insurance risks.
With those risks growing - particularly as heat-trapping emissions continue to rise - traditional methods of dealing with them may not be enough as the world tracks toward 2 degrees Celsius or more of global warming, the twin reports warn.Read more from All Africa.
Source: All Africa