Insurers warn climate change could double premiums

Insurance companies are reportedly poised to increase their estimates for future premiums as scientific predictions about the impacts of climate change continue to worsen.

According to Sunday Times reports yesterday, a new report by the Association of British Insurers will show that previous estimates of climate change-related damage are too low and need to be updated in line with recent scientific predictions that temperatures could rise by between four and six degrees by the end of the century.

"We are concerned that our estimates in our [last] report [in 2005] were too conservative," Swenja Surminski of the ABI told the paper. "Climate change is likely to have a more severe impact on the future price, affordability and availability of insurance coverage."

Premiums for businesses and householders in those areas that see increased risks of flooding as a result of climate change could more than double, according to Andrew Dlugo-lecki, a visiting research fellow at the University of East Anglia's Climatic Research Unit.

Premiums for natural disaster cover have already risen following one of the costliest catastrophe years for the insurance industry in history, which resulted in disaster-related economic losses of $269bn, and experts are predicting that the expected increase in the incidence of such events will lead to higher premiums.

In related news, a separate forthcoming report from the International Institute for Applied Systems Analysis will reportedly show that the €1bn EU Solidarity Fund, which is supposed to cover "uninsurable risk" for government-owned infrastructure, such as roads and bridges, will need to be increased if, as expected, the risk of climate change-related infrastructure damage rises.