Climate catastrophes cost $92bn

MILAN - From catastrophic floods to searing droughts, extreme weather linked to global warming has helped send insurance claims soaring and premiums may follow suit.

"The extremes around the world are on the increase," Thomas Loster, head of weather and climate risks research at Munich Re, told a news conference with the United Nations Environment Programme in Milan.

"There are cities around the world where floods have become frequent and companies cannot insure at premiums that are acceptable to the client."

Natural disasters cost the world more than US$60 billion ($92 billion) this year, a quarter of which was insured, according to "snapshot" findings from Munich Re.

Both figures are up from last year, when global losses were US$55 billion and insured losses US$11 billion.

Insurers have responded by trying to raise prices and policy excesses, though competition and political pressure have sometimes limited their ability to do so.

In the end, though, they will have little choice, he said.

"If losses go up, then premiums will go up. Climate change will aggravate the risk situation."

Loster, who also heads a climate change working group of the UN Environment Programme Finance Initiative, said losses this year - more than US$10 billion of which was caused by a European drought - fell short of a record of about US$100 billion in 1999.

The study was presented on the sidelines of 180-country UN talks in Milan on the Kyoto Protocol - a pact to limit emissions of gases believed to cause global warming.

The treaty may never take effect as the world's biggest polluter, the United States, has rejected it and Russia is threatening not to ratify.

The Munich Re study found an inexorable increase over the past 40 years in devastating events with links to global warming which are taking an increasing economic toll.

"We will have to get used to the fact that extreme summers, like the one we had in Europe this year, are to be expected more frequently in the future and that they will become more or less the norm by the middle of the century," Loster said.

Insured losses had increased by a factor of 10 in four decades.

Lifestyles have also played a role as people in wealthier countries have tended to build more valuable houses and migrated towards coastal areas like Florida in the US, which are more subject to flooding.

But even inland areas are feeling the squeeze, as the German city of Dresden did last year when it was swamped by floods caused by rain in one day that exceeded a previous record threefold.

- REUTERS