Munich Re’s expert on climate change research is optimistic on a deal at next year’s Paris summit – and offers some hard numbers on the potential savings from flood mitigation investment.
Fresh from the United Nations’ Climate Summit in New York City, Peter Hoppe, head of Geo Risk Research/Corporate Climate Centre, sat down for an exclusive interview with Insurance Business.
“We have a long tradition of co-operating with the United Nations in regards to climate change,” says Hoppe. “Insurance can be a part of that adaptation, with our expertise, knowledge of the vulnerabilities and the perils. We don’t have to pay more and more for losses – but we need to pay more and more on preventive measures.”
One in 20 heads of state attended the September 23 summit hosted by Secretary-General Ban Ki-moon, along with more than 100 company CEOs. While discussing what measures to take to control Global Warming inside the U.N. headquarters, thousands gathered outside on the streets to protest the hazards of climate change.
A demonstration that was welcomed by delegates, says Hoppe.
“The demonstration that was held during the Summit actually lends more weight to the message we are sending,” he says. “Some experts have said, ‘without the demonstrations, the climate summit wouldn’t have been as much of a success.’”
Although change is needed now, convincing politicians and industry leaders of the urgency of such change is a difficult one.
“Change is a long way down the road,” says Hoppe. “The problem is money. They have to decide today to invest in climate-friendly technologies and renewable energies. The benefit of that, of reducing future losses, won’t be seen for another couple of decades. And this is the problem: politicians like to invest in things that show the benefits in the legislation period; or the election period! And this is the problem of long-term investment, of trying to act in a responsible way for the next generation.” (continued.)
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Hoppe cites recent studies by a colleague of his who has examined the potential savings through simple mitigation efforts that can be done now – and offers lessons that can be learned from Europe for those who felt the brunt of last year’s flooding in southern Alberta.
“We have already started flood mitigation in Hamburg, Germany,” says Hoppe. “There was a big storm surge in 1962, killing hundreds of people and creating 1 billion euro loss. Since then, 2 billion euros have been invested in the city, and nine times the river level has been higher than 1962; and nothing in terms of losses have happened since then. It is estimated that we have saved more than $20 billion in potential losses.”
A study following the Calgary flooding event shows that infrastructure costs to mitigate a recurrence of a similar flood would carry a price tag of $2 billion. A cost that politicians may balk at, but which can prove their worth, given the Hamburg investment and reward.
“This is very important for decision makers,” says Hoppe. “By investing in this, we can save this much. The Calgary flood has been the most expensive flood disasters on record.”
Investing in mitigation now is a message that the insurance industry and all levels of government need to drive home to its citizens, says Hoppe.
“The longer we wait on climate mitigation measures, the more we will pay in losses,” he says. “We need to tell the taxpayer that we need to spend more now, or we will be paying much, much more 10 to 20 years from now. As parents, we need to see this as an investment for a better future for our children.”
Although winning the battle on global warming may seem like a punishment fit for Sisyphus, Hoppe sees a reason for hope for next year’s Climate Summit in Paris, France.
“I am optimistic for Paris,” he says. “China and the U.S. have stated that they want an agreement on this, an agreement on global warming.”
