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November 2005 Insurance Risk Raised by Global Warming
As chairman of reinsurance giant Swiss Re America Holding Corp., Jacques Dubois is understandably concerned as more and more of his company’s payouts go to cover losses from earthquakes, floods, and other natural disasters. Events such as “100-year floods” are showing up every few years, producing large losses for the insurance industry, and forcing it to readjust old probability tables, Dubois told a Business School audience in this year’s von Gugelberg Memorial Lecture on the Environment. Swiss Re America’s vast staff of scientists has concluded that many of these environmental catastrophes could be linked to a warming of the Earth’s atmosphere. “We consider climate change to be one of the most significant emerging risks to our industry,” Dubois said. But it is not just the headline-making weather disasters that are producing such large losses to insurers. More frequent and intense heat waves can be blamed at least in part for the emergence and the resurgence of 30 infectious diseases over the past 30 years, from West Nile virus to the bubonic plague, he said. Global warming also can lead to deforestation, drought, and forest fires. From there, he warned, it is not a stretch to draw a link between climate stresses and political instability and conflict over rights to basic resources like food and water. Dubois called for much more to be done to educate businesses about the magnitude of the problem. For its part, Swiss Re America has committed to making its own operations greenhouse gas neutral within 10 years. Progress could be faster if the discussion over climate change were more unified, he said. “Good deeds alone cannot solve the problem, and government can’t do it alone. The business community must become more involved.” |
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