Transcript Munich Reinsurance Group in Australasia

Munich Reinsurance Group in Australasia
Managing extreme weather risks: How do we know
what to expect in Asia Pacific?
Heinrich Eder
Temperature anomaly (◦C)
relative to the 1961-1990 average (14◦C)
Global mean air temperature - observations
2007 is 8th warmest year on record.
The last 13y (1995-2006) represent the warmest on record, exception 1996.
2007 anomaly: +0.40°C, above the 1961-1990 annual mean.
Green Cross, Brisbane, 30 August 2008
Source: CRU, UK (2007) 2
Urgency!
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Australian climate change, observations
Warming of 0.9oC since 1910, mostly since
1950 due to increases in greenhouse gases
2005 was Australia’s warmest year on record
2007 was the warmest year on record for
SA, NSW and Vic
More heatwaves and fewer frosts
More rain in the west since 1950, but less in
south and east
Victoria - drying in autumn
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Source: BoM/CSIRO4
Number of significant natural catastrophes, global
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Economic losses vs Insured losses since 1950’s,
global
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Night on earth
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South East Queensland (SEQ) scenarios
 SEQ: Brisbane, Gold and
Gold Coast
Sunshine Coast
 > 2.7m residents, 66% of
states population
 Strongest population
growth in Qld (71% within
the last 5 years!)
 Australia’s highest
exposed values concerning
TC’s, hence highest
accumulated losses.
Green Cross, Brisbane, 30 August 2008
1966, population 40,000
today > 508,000
Source: Climate Change and Coastal
Erosion, Prof. R. Tomlinson, ABS, Qld
population update.
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Population trends in metropolitan areas
2021
min
2051
max
min
max
Sydney
14%
18%
25%
49%
Brisbane
26%
46%
56%
136%
Darwin
17%
50%
40%
171%
Australia
14%
24%
24%
66%
• Projections compared to June 2004 population
• Fertility rate, mortality, internal and net overseas migration
Source: ABS
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Climate change projections
Mid range emission scenario for 2030 (relative to 1990)
Sydney mean warming of approx 0.9◦C
Reduction in rainfall over Australia
Increase in the frequency of hot days (above 35◦C)
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Source: CSIRO/BoM
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Strategic approach to climate change
Three areas
Asset management
Risk measurement /
underwriting
New markets /
new products
Integration of
sustainability criteria
into investment
strategies
Changed frequencies/
intensities of weather
hazards in underwriting/
risk management
Pathway to low-carbon,
hazard-adaptive
economies: new
business opportunities
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Munich Reinsurance Group in Australasia
Thank you
Increasing cost of weather related disasters:
Main Drivers
 Rising population
 Better standard of living
 Concentration of people and values in large urban areas
1950 30% of world‘s population in urban areas
2005 50% of world‘s population in urban areas
2030 60% of world‘s population in urban areas
 Settlement and industrialisation of extremely exposed regions
 Susceptibility of modern societies and technologies to natural hazards
 Increasing insurance density
 Climate Change, particularly future loss development
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Munich Re’s Kyoto Multi Risk Policy
Insured:
Institutions engaged in projects for
generation of emissions credits
Compensated:
Shortfall of emissions’ reduction
compared to plan
Advantage:
Bundle of traditionally separated
insurance lines (physical damage,
counterparty risk, country risk, …)
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Increasing business opportunities - ENERGY
Covers for renewable energies / energy
efficient technology
• wind power:
on-shore / off-shore
• Solar thermal /
photovoltaic power
• coal gasification
• biomass
• geothermal power
• wave power
• low energy buildings,
e.g. Green Building
Council’s Green Star
program
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Increasing business opportunities - ENERGY
Australian energy consumption
2.1% year growth in energy consumption until 2020
=> new sources required
More hot spells => air conditioners => higher peak energy demand
in urban areas
• Huge renewable energies’ potentials in Australia
• Huge energy efficiency potential
• General growth in businesses / economies operating in
those areas, resulting in increased economic treaties
Covers for low-carbon technologies/energies
e.g. carbon capture and storage technologies
Insurers:
promote these technologies by insurance cover in the construction
and performance phase
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South East Queensland (SEQ): Tropical Cyclone
 Demographics:
Population growth, Increased standard of living,
Increased value at risk, Perception of risk
 Buildings / Infrastructure:
Coastal development, Building construction, design & maintenance,
Building Code of Australia, Critical Infrastructure planning
 Climatology: Intensity and / or frequency, natural climate oscillations
 Insurance: Non-insurance and Under-insurance, Historical losses, Risk
Accumulations and Catastrophe models, Minimises business interruption
Estimation of return periods extremely difficult
High uncertainties (i.e. large range of losses) from models, exclude storm surge
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