Insurance industry uses scientific evidence to manage costs of global warming

Despite many arguing that global warming is a hoax, the global insurance industry is using climate change data to model insurance scenarios based on the environmental effects of increased temperatures. 

"Nowadays there is a lot of global warming data available from a plethora of newly established research foundations, scientific bodies and private organisations all studying climate change. This data is allowing the insurance industry to look carefully at its capital requirements in light of the greater frequency and severity of climate-related losses", says Gari Dombo, Managing Director, Alexander Forbes, Personal Services.

Dombo believes, that given this new evidence, "Individuals, businesses and even governments, need to be sure that they are covered for risks caused by global warming."

For example, on land, the effects of global warming can be seen in:

*  The evaporation of lakes and water sources, which along with the melting of mountain and coastal glaciers is causing food and water shortages and increasing human migration to coastal areas.
*  Unusual, more frequent and exceptionally large dust storms.
*  Subsidence in dried-out landscapes.
*  Dryness of vegetation, increasing fire risk.
*  More disease-producing pests, like mosquitoes, ticks and disease-bearing flies searching for water in developed areas.

In the air, warmer air circulating between the land surface and upper atmosphere reacts more violently when it meets cold airflows, causing:

*  Loss of cloud cover and a reduction in rain.
*  More violent lightening bolts when thunder storms, often without rain, occur.
*  More tornadoes than usual.
*  More severe wind, sand, rain, hail, snow and ice storms.
*  River flooding and water level rising in lower lying coastal areas.
*  More frequent heat waves, causing heatrelated medical conditions and in some cases death, along with energy surges and increased power failures occasioned by increased air conditioning.

Furthermore, warmer sea surfaces cause:

*  Ice cap melt and sea level rise.
*  Sea surges that reach further inland.
*  Warmer waters also intensify the El Nino effect increasing drought conditions in the southern hemisphere. This threatens crops and agriculture, increasing food price fluctuations and even availability.
*  Warmer air to rise off warmer seas, causing larger and more intense tropical storms, hurricanes and typhoons while increasing their frequency and distribution.

"One has only to look at the damage caused to private homes along the Kwa Zulu Natal coast in 2007. While no direct link has been made with climate change these floods were caused by; 'Unusually high waters combined with prolonged and intensified storm activity all classic barometers of global warming", says Dombo.  

Given what we know to date, Dombo believes that action can be taken to mitigate the growth and increasing intensity of natural disasters. Actions range from government and global programmes to reduce harmful gas emissions, to building fire breaks, river barriers and dykes. They also include, setting up of hurricane warnings and evacuation procedures, as well as establishing dedicated national flood or general disaster funds.

Dombo points out that, "Despite these responses, natural disasters will continue to have a wider impact, require more recovery time and cause greater destruction, damage, loss, injury and even death. Furthermore, clean-up, which takes place before claims can be settled, will increase in scale, area, resources required, duration and cost."

Recently, widespread fire damage in Kwa Zulu Natal and Mpumalanga has demonstrated the need for multi-sector responses. Private individuals, land owners, businesses and even whole municipalities find their insurance packages hopelessly inadequate as the scale of natural disasters increase. 
 
"This was bought home dramatically during last year's hurricane season in the Gulf of Mexico and the south of the United States. Entire insurance companies had to be bailed out by government such was the extent of the damage caused", says Dombo.

In response, Dombo believes, insurers need to, "Understand that the potential for damage resulting from natural disasters is increasing as global warming accelerates."

That said, it is increasingly possible to research the full potential for damage and put adequate catastrophe protection in place.

"Every year there is less guessing as the science of climate change becomes more sophisticated", adds Dombo.

Fortunately for South Africans, the effects of global warming have, to date, been more severely evidenced in the Northern hemisphere where the bulk of pollution originates. There is comparatively little production of CO2 and Methane emissions in the southern hemisphere.

Furthermore, "Africa, south of the equator, is a relatively small land mass compared to that of North America, Europe and Asia. There is simply less inhabited space for things to go wrong in, and fewer people", says Dombo.

In short, Dombo concludes that, "South Africans are, for now, probably more insulated from the effects of global warming than people in the northern hemisphere. That said, we are not immune and, in time, going on the evidence, can expect climate-related disasters to become more severe".