Inside View - Don't look backwards to rate the future!

(From Reinsurance)

Byline: Henry Keeling is chief executive of reinsurance operations, XL

European floods and the Atlantic hurricane season are, once again, combining to produce 'one-in-every-100-years' events, and there is an expectation that we will see an increasing number of these in coming years.

Few in the (re)insurance industry would deny that the catastrophe market is becoming more volatile, with worldwide financial losses due to natural disasters doubling every 10 years since the 1960s, according to the Association of British Insurers (ABI).

However, the causes for this and how we can and should respond are rightly continuing to emerge as topics for debate. For decades the subject of global climate change has largely been kept off the business and political agenda, but now we are seeing prominent figures in our own sector not only publicly accept global warming as a phenomena, but, significantly, also correlate it to the devastation of recent natural catastrophes.

The ABI published its 'Financial Risks of Climate Change' paper earlier this summer, and has this has generated a lot of media coverage on the subject in the wake of Hurricane Katrina. Likewise, Munich Re has stated that global warming has contributed to a rise in worldwide insurance losses over the past 50 years.

I welcome the debate on this subject, and especially the work that is being done by academics to analyse and understand the nuances of impact caused by climate change. What emerges is not a single trend, but a patchwork of effects relating to the frequency, duration and ferocity of events.