Martin Bertogg, Head of Catastrophe Perils at reinsurance giant Swiss Re, has called on society to adapt and prepare for increasingly frequent and severe occurrences of extreme weather conditions, such as the heatwaves and dry spells witnessed in recent times.
The Swiss Re Institute, a division of Switzerland-based reinsurer Swiss Re, recently launched its sigma report, which discusses global catastrophe events in the first-half of 2018 that amounted to an economic loss bill of $36 billion, of which $20 billion was insured.
Despite both economic and insured losses in H1 2018 being down on the previous year, and also considerably below the previous ten-year averages, the reinsurer warned of an expectation of more frequent and severe extreme weather conditions.
“We expect to see more extreme weather conditions such as intense heatwaves and dry spells of the like we’ve seen over the last few weeks. This may well become the new normal. According to scientific climate models, temperature, and atmospheric humidity will increase in many parts of the world, and at the same time also become more volatile,” said Bertogg.
“We will experience more variable rain patterns and severe droughts and in consequence raging wildfires. Accelerating urbanisation and the ongoing expansion of dwellings in natural forest areas will considerably exacerbate this loss potential. Society will need to adapt and prepare for these increasing occurrences,” he added.
So far in 2018, numerous parts of the world have experienced heatwaves and very dry conditions, which has resulted in the largest wildfire in the history of California, a severe wildfire in Greece, as well as intense drought conditions in parts of Europe and southern Australia. Losses from the droughts and wildfires are yet to be fully understood, and this might well be the case for some time owing to the scale of the events.
Adding to the warning from Bertogg, Swiss Re’s Chief Financial Officer (CFO), John Dacey explained recently that the reinsurer sees the series of storms that occurred in H2 2017, being hurricanes Harvey, Irma, and Maria, as more of a one-in-10-year event rather than a one-in-100-year event.
And, at the same time, the firm’s Chief Executive Officer (CEO), Christian Mumenthaler, noted during the company’s H1 2018 media call, that in the view of Swiss Re, the recent droughts and wildfires in Europe, as well as the wildfires in California, is “strongly linked to climate change.”
While the climate change debate remains ongoing, it’s clear that Swiss Re feels that more frequent and severe extreme weather conditions are a result of the changing climate. Of course, more frequent and intense outbreaks of severe weather doesn’t necessarily mean higher losses for insurance and reinsurance companies.
However, with urbanisation increasing alongside rising asset values in many catastrophe-pone parts of the world, and the fact people continue to live in some of the most catastrophe-exposed places on the planet, the potential for greater economic and insured losses from weather and climate-related events is very real.