NZ actuaries share climate change beliefs

NZ actuaries share climate change beliefs | Insurance Business

NZ actuaries share climate change beliefs
Most New Zealand actuaries believe climate change is happening and the majority believes humans are the cause, according to the results of a new survey.

The results came from members of the New Zealand Society of Actuaries who were surveyed from August to September generating 129 unique responses which were delivered as part of a paper Climate Change: How the world’s greatest risk will impact New Zealand at the Society’s biennial conference last week.

The majority – 59% – believe humans are causing climate change while 30% believe it is happening but that it is a natural fluctuation in the earth’s temperatures.

Three per cent said they didn’t believe it was happening and 7% said they had no idea.

Most of the members supported the scientific view that a number of different events will increase in frequency and/or severity as a result. These include heavy rain, flood, sea level rise and storms with the potential for increased drought and heatwave also thought to eventuate.

While New Zealand’s economy is heavily dependent on international trade and therefore indirectly affected by how other countries are impacted by climate change, it will also be impacted directly itself.

The paper points to the Ministry of the Environment’s summary of major expected changes as including higher temperatures for longer periods of time; rising sea levels; more frequent extreme weather events and a change in rainfall patterns with higher rainfall in the west and less in the east.

With property insurance likely to be the most impacted by climate change over any other insurance sector, it wasn’t surprising that more general insurance actuaries (53%) than life insurance actuaries (26%) believed their work should take climate change into account, the paper’s authors Jonathan Nicholls and Richard Beauchamp said.

Only 25% of members believed their field of work takes climate change into account already – with 37% of general insurance actuaries responding in the affirmative compared to 3% of life insurance actuaries.

Interestingly, 57% of actuaries working in the wider financial services sector (eg banks, investments) believed their field of work took into account climate change.

“It should also be noted that several members wrote requesting that the Society not get involved in the public debate,” the authors said, “and that other topics (such as longevity) required more focus than climate change.”

However, many offered constructive suggestions on what changes their field of work should make to adjust for the projected impacts of climate change.

These included assisting a managed retreat of housing in coastal and floodplain high-risk areas; re-building in the same area to a higher standard of protection (rather than like for like); adapting premiums to encourage adaption measures and ensuring catastrophe models incorporated climate change through allowing for increasing frequency and severity of weather disasters.

Nicholls and Beauchamp said: “In the view of the authors, it is incumbent upon the industry to act. Actively assisting adaption through some of the suggestions is likely to provide better differential risk-based pricing, reduce long-term claims costs, reduce reinsurance premiums and provide a societal good.”

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