[ SMEs not prepared for climate change, says CII and Axa ]

Global warming will have an impact on the environment and economy and will affect all lines of business for insurers, according to Alexander Scott, CEO, Chartered Institute of Insurers (CII).

One of the main risks facing insurers is the increasing frequency of one in 100 year events, said, editor in chief and author of the report Dr Andrew Dlugolecki, Andlug Consulting.

One in 100 year events are happening more frequently, approximately every 12 years, compared to them happening once every 80 years in 1900, said Dr Dlugolecki.

As a result things that insurers wouldn't have thought about reinsuring against are more likely to happen. We can see that one in 100 year events are happening more frequently and are already affecting insurers through the increase in reinsurance prices, said Dr Dlugolecki.

Temperature change is fundamental to all things that are insured against, and increasing temperature change presents a real risk to insurers, according to the CII's new study on climate change Coping with climate change: risks and opportunities for insurers.

The affects of temperature change include subsidence, storms and rainfall all of which can lead to increased claims activity.

Climate change is already affecting insurers through increased claims. And the insurance industry needs to prepare for this continuing trend, said the study.

Vulnerable sectors to climate change can present opportunities for insurers, said Dr Dlugolecki. The tourism and leisure business particularly, is sensitive to weather conditions, especially the turnover of business for hotels and local services in tourist destinations. Insurers can help businesses to cover loss of tourism business as a result of a climate change event.

New energy technologies are another area for insurers to take advantage of. Insurers can develop insurance products to cover new energy technologies such as wind farms, said Dr Dlugolecki.

There is also opportunity for insurers in uninsured segments such as small and medium business enterprises. SMEs are not prepared for the impacts of climate change, according to the report.

Truska Angel, head of climate change, Axa Insurance said: "In 2006 Axa looked at the affects of climate change on SMEs and produced a report to prepare SMEs for climate change. We also launched a carbon footprint calculator for SMEs so that companies can understand the size of their carbon footprint and act effectively."

Originally published March 6, 2009 - www.thereview.biz