Allianz Investigates Consequences of Climate Change

The Web site of Germany’s Allianz (http://www.allianz.com/) features an interview with two of the company’s climate experts, Matthias Klawa of Allianz Reinsurance and Olav Bogenrieder of Allianz Versicherung, who comment on how changing climatic conditions could affect Allianz’s business dealings.

The Group will present a study on the subject in June. It noted that “in 2002 we had the ‘flood of the century’ and in 2003 the ‘hottest summer of the century,'” and asked Klawa if he saw more of the same in the future. “Yes, we think so,” he replied. “In the last 20 years, the temperature in Europe has risen approximately one degree Celsius [1-5/9°F] above its previous long-term average. We agree with the view held by the majority of scientists that greenhouse gases are a significant contributor to this change and that it will thus continue.”

He also stressed that the “costs incurred as a result of natural disasters have increased dramatically in the last few decades. Admittedly, this is due in part to industrial development, since the damage caused by storms is now more costly to repair. For example, a devastating hailstorm like the one which hit Munich in 1984 would now lead to far more costly damage, just one reason for this being the fact that the number of vehicles in Germany has risen by 70 percent since then.”

Commenting on the four hurricanes that struck the Southeastern U.S. last year, Klawa discounted the influence of global warming, indicating that it was less of a factor as “natural variables also play a part in this phenomenon.” He also noted, however: “It is conceivable that the areas where typhoons and hurricanes occur could expand or even shift. At the moment, for example, there is considerable debate about the tropical cyclone which occurred off the coast of Brazil, an area which has so far not been considered to be at risk.”

In response to a question about how climate change affects the insurance industry, Klawa stated that it “creates significant economic risks which are extremely varied. Reinsurers and primary insurers play a particularly important part in dealing with its consequences. For example, in 2004 insurers worldwide paid out almost 50 billion US dollars on claims related to natural disasters. That was a record high, and reinsurers estimate that more than 90 percent of all the insured losses were due to weather events.”

Bogenrieder cited the remedial actions people can take to protect themselves and what governments can do as well. While he centered mainly on Germany, much of his advice is universal – e.g. “Anyone building or purchasing a new home should definitely do their research and avoid properties built on land, which is in danger of flooding. Anyone who moves into a house next to a river which floods every few years should be aware that they are entering into a considerable amount of risk which simply cannot be passed on to an insurance company.”

He admitted, however, that there’s little the general public can do, other than buy insurance, to prepare for extreme weather events.