Changing climate means changing risk
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TEXT OF INTERVIEW
Steve Chiotakis: We’re a couple of days into week two at the U.N. Summit in
Copenhagen, and world leaders continue to grapple with the issue of climate change. Marketplace is there with reporters covering the meetings. In the insurance business, a changing environment means changing risk. Over at one of the world’s largest reinsurers, they’re looking at how that can affect areas and properties it covers. David Bresch is head of Sustainability and Emerging Risk at the Swiss Reinsurance Company, he joins us now. Hi, David.
David Bresch: Morning.
Chiotakis: I’m curious why an insurance company would be interested in addressing climate change.
Bresch: Climate change being probably the key risk of this century, definitely we have to figure out what are the consequences of a changing environment, a changing climate on our existing risks, the risks in our books, and where can we provide solutions to societies in order to better cope with the changing risk landscape.
Chiotakis: So what are you doing to address these issues?
Bresch: Basically, make sure we do understand the risks we are underwriting, and understanding the risks that not only mean looking back in a mirror, but it definitely means also in visiting the future. And especially through assimilation techniques, making sure we understand the different possible futures we have to face, and then make sure we put them into our considerations.
Chiotakis: Now you looked at eight locations, including right here in the United States, in Florida. So give me some examples of what you found in the state of Florida.
Bresch: Basically we said, if we’d like to help societies develop in a resilient way, then we need to understand what does a changing climate mean to local communities? And namely, the one for Florida show us that 40 percent of the loss projected by 2030 can be avoided by cost-effective measures. For example, if greenery is well-maintained, and kept reducing flying debris, so to speak, that has a positive impact, reduces losses in case of a large tropical cyclone event. And then in addition, definitely when it comes to the insurance side of the balance sheet, then it’s making sure that the pricing of these covers is risk-adequate.
Chiotakis: So is the pricing risk-adequate?
Bresch: The point is, regarding climate change, this has to be looked at very carefully. And indeed, in some areas, we are of the opinion that the pricing is not sustainable and it will take quite some time for communities to properly understand the risk landscape in order to come up with a strategy to foster resilient development.
Chiotakis: Well, David Bresch, head of Sustainability and Emerging Risk Mangement over at the Swiss Re, we do thank you for being with us today.
Bresch: It’s been a pleasure.
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