10 Oct
2006 - Washington, DC – The insurance industry
should do more to address the growing impact of
climate change-induced damages, according to a
new report by WWF and the Allianz Group, one of
the world's largest insurance providers.
The report, Climate Change and
Insurance: An Agenda for Action in the United
States, examines the latest scientific findings
about climate change, including the impacts of
forest fires, storms and floods, and the potential
impact on the insurance industry and its customers.
“Global warming is the greatest
environmental threat facing the world, and the
people and animals that inhabit it," says
Carter Roberts, President and CEO of WWF-US.
"The cost of doing nothing
carries a price tag none of us can afford,"
he added. "The insurance industry has a vested
interest in stepping up to the plate and being
a part of the solution. Allianz has been a leader
on this issue and we hope that the entire industry
makes climate change a top priority.”
According to the report, climate
change has the potential to significantly alter
and intensify destructive weather patterns in
the United States, leading to increased flooding,
forest fires and storm damage. The most direct
risk to the US will likely come from hurricanes,
which are expected to become more frequent and
powerful.
Additionally, rising sea levels
over the coming decades could inundate many US
coastal cities and portions of some coastal states.
Forest fires could become even more frequent and
larger. These changes could make insurance unaffordable
for customers in high-risk areas. In fact, insurance
premiums in states vulnerable to hurricanes are
already increasing, and in some cases, insurers
are exiting these markets altogether.
Allianz and WWF intend to engage
the insurance industry, governments, regulators
and others to better manage the risks associated
with climate change.
“We need to better understand
the effects of climate change and the changing
environment for our customers,” says Clem Booth,
member of the Board of Allianz AG, “but if we
can find a way to provide insurance in the face
of major changes, from the first transatlantic
voyages to global terrorism, then we can find
new ways to address climate change.”
One key recommendation for addressing
the potentially adverse consequences of climate
change in the US is for both governments and insurance
companies to help correct market distortions and
communicate appropriate signals to homeowners,
businesses and consumers moving into high risk
areas. The report points to the need by regulators
to consider carefully the impact of programmes,
like the National Flood Insurance Programme, which
keep insurance rates artificially low. By masking
the real price of risk, such policies encourage
overdevelopment in high risk areas.
In addition, the report suggests
US insurers begin incorporating future potential
climate change impacts, such as continued sea-level
rise and longer fire seasons into planning, rather
than relying only on historical data of past weather
events.
The report also recommends that
insurers influence land-use development and planning
in high risk areas. For example, conserving coastal
mangroves provides a natural buffer from storms,
surges and waves, while forest preservation can
reduce mudslides.
Another way to minimize losses
related to climate change is to promote storm-resistant
and energy-efficient building materials, improved
building codes, and better public education about
their benefits.
“This emphasizes the win-win
opportunity for customers presented by energy-efficient
buildings that also incorporate state-of-the-art
protection against wind damage, fire and water
influx,” added Booth.
Fireman's Fund Insurance Company,
a unit of Allianz AG (Charts), this Fall plans
to introduce commercial insurance policies designed
to support and encourage the development of "green"
buildings that save energy and reduce emissions
of greenhouse gases. One of the products will
provide a discount to LEED (Leadership in Energy
and Environmental Design) or Green Globes certified
buildings.
A second commercial property
product will upgrade customers to energy efficient
or “green” products when replacing damaged items
such as roofs, windows, equipment, lighting systems
and hot water heaters. And, a third product will
provide commissioning coverage to inspect systems
such as HVAC after installation for proper installation
and efficiency.
“Our new products will promote
energy efficiency, resulting in a reduction of
greenhouse gas pollution as well as cost savings
for our customers," said Chuck Kavitsky,
Chief Executive Officer of Fireman’s Fund.
"Energy-efficient construction
can also help make buildings and homes more resilient,
while double pane windows are less likely to shatter
during fires. A lot of building owners are concerned
about climate change but don’t know what to do.
Here’s one thing building owners can do that addresses
more than their bottom line.”
In line with the report’s recommendations,
Allianz is taking several actions to help develop
solutions for its customers and the industry as
a whole. These include investing $600 million
in renewable energy projects over the next five
years, introducing a new tool based on Google
Earth in the US to help customers better manage
their exposure to natural catastrophes, and cutting
its own greenhouse gas emission by 20 per cent
by 2012. Allianz is also planning to begin developing
new products that address global warming and will
start researching ways to integrate the anticipated
potential future impacts of climate change into
its risk models.
END NOTES:
• Allianz Group is one of the
world's leading insurers and financial services
providers, present in more than 70 countries with
over 177,000 employees. At the top of the international
group is the holding company, Allianz AG, with
its head office in Munich, Germany. The Allianz
Group provides its more than 60 million customers
worldwide with a comprehensive range of services
in the areas of property and casualty insurance,
life and health insurance, and asset management
and banking. In fiscal year 2005, Allianz's total
revenues amounted to some €100.9 billion. At the
end of 2005 Allianz Group had more than €1.26
trillion assets under management.
• The study — Climate Change
and Insurance: An Agenda for Action in the United
States — is published by WWF and Allianz, and
has been prepared in close cooperation with the
professionally renowned authors named in the report.
The study contains general information and does
not take into account specific circumstances which
might be relevant for individual readers. The
information, expectations and opinions reflected
herein constitute judgment as at the date of this
study and neither WWF and Allianz nor the authors
assume any obligation to update the information
and recommendations contained herein. We explicitly
advise any reader that the content of the report
and the respective recommendations are based on
information and expectations that may be subject
to changes in the future or may not develop as
currently expected. Consequently, the reader should
not base any decision solely on the content of
this study. The study does not intend to provide
any guidance regarding any investment, in particular
with respect to securities of Allianz Aktiengesellschaft
or any of its subsidiaries.
Kerry Zobor, Vice-President for Communications
Martin Hiller, Communications Manager
