The current economy and urban infrastructure of the U.S. must be “climate-proofed” for resiliency, said panelists at a major climate-change panel that included speakers from insurance, business and government organizations.
“In 2012 the impacts of severe weather cost the global economy some $160 billion, with only $70 billion of that being covered by insurance,” said Philip Ryan, chairman of Swiss Re Americas, a founding sponsor of Climate Week. “As experts on risk, everything we see points to the inescapable fact that climate change is something which we simply cannot ignore.”
Held on September 23, Climate Week 2013 was the fifth anniversary of an annual global summit where political and business thought leaders discuss solutions to slow and mitigate the effects of climate change. Attendees included entrepreneur Sir Richard Branson, World Bank president Jim Kim, US Secretary for the Navy Ray Mabus and other dignitaries.
There are $10 trillion in insured assets along the vulnerable portions of U.S. coastlines, Swiss Re wrote in its 2013 “Mind the Risk” climate change report. According to Swiss Re, New York City is the U.S. urban area most exposed to storm surge, with 1 million people directly at risk.
“Eleven months after Hurricane Sandy devastated the US Atlantic Coast, causing approximately $70 billion in economic losses, we are still rebuilding,” said Ryan. “The majority of losses not covered by insurance are paid for by the taxpayer. By addressing the crisis of climate change — through prevention, preparedness and financial protection — we can make our communities more resilient.”
Historically, level of loss caused by Sandy may occur once every 70 years, wrote Swiss Re. Considering climate change causing rising sea levels and stronger storms, a similar storm in the future may cause the City a loss of $35 billion in 2025 and $90 billion—five times Sandy's impact—by 2055.
In an email to PC-360, Mark Way, head of sustainability at Swiss Re Americas, said the catastrophes of previous years, including Hurricane Irene and the 2012 Ohio-Maryland derecho, should be used as a lesson about U.S. dependence on technology and transportation—a lesson producers must take to heart.
Climate Week speakers said that the National Flood Insurance Program (NFIP), which is operating at a $24 billion debt, provides almost all residential flood coverage in the U.S.
“In addition to the lack of [flood] insurance, regional congestion will make recovery more complex and costly,” warned Way. “The environment we live in today is built for the climate of the past, not the climate of the future. This needs to be addressed.”
Way said insurance plays an important role in the culture of resiliency, as the insurance industry creates transparency about the risks people and businesses face by using actuarially based rates to calculate the cost of policy premiums.
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