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Munich Reinsurance Group in Australasia. Managing extreme weather risks: How do we know what to expect in Asia Pacific? Heinrich Eder. Global mean air temperature - observations. Temperature anomaly ( ◦ C) relative to the 1961-1990 average (14 ◦ C). 2007 is 8th warmest year on record. - PowerPoint PPT Presentation
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Munich Reinsurance Group in Australasia
Managing extreme weather risks: How do we know what to expect in Asia Pacific?
Heinrich Eder
2Green Cross, Brisbane, 30 August 2008
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.Source: CRU, UK (2007)
Tem
pera
ture
ano
mal
y (◦
C)
rela
tive
to t
he 1
961-
1990
ave
rage
(14
◦C
)
3Green Cross, Brisbane, 30 August 2008
Urgency!
4Green Cross, Brisbane, 30 August 2008
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
Source: BoM/CSIRO
5Green Cross, Brisbane, 30 August 2008
Number of significant natural catastrophes, global
6Green Cross, Brisbane, 30 August 2008
Economic losses vs Insured losses since 1950’s, global
7Green Cross, Brisbane, 30 August 2008
Night on earth
8Green Cross, Brisbane, 30 August 2008
South East Queensland (SEQ) scenarios
SEQ: Brisbane, Gold and
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.
1966, population 40,000 today > 508,000Source: Climate Change and Coastal Erosion, Prof. R. Tomlinson, ABS, Qld population update.
Gold Coast
9Green Cross, Brisbane, 30 August 2008
Population trends in metropolitan areas
• Projections compared to June 2004 population
• Fertility rate, mortality, internal and net overseas migration
2021 2051
min max min max
Sydney 14% 18% 25% 49%
Brisbane 26% 46% 56% 136%
Darwin 17% 50% 40% 171%
Australia 14% 24% 24% 66%
Source: ABS
10Green Cross, Brisbane, 30 August 2008
Climate change projections
Mid range emission scenario for 2030 (relative to 1990)
Reduction in rainfall over Australia
Source: CSIRO/BoM
Sydney mean warming of approx 0.9◦C
Increase in the frequency of hot days (above 35◦C)
11Green Cross, Brisbane, 30 August 2008
Strategic approach to climate change
Three areas
Asset management
Integration of sustainability criteria into investment strategies
Risk measurement / underwriting
Changed frequencies/ intensities of weather hazards in underwriting/ risk management
New markets / new products
Pathway to low-carbon, hazard-adaptive economies: new business opportunities
Munich Reinsurance Group in Australasia
Thank you
13Green Cross, Brisbane, 30 August 2008
Increasing cost of weather related disasters: Main Drivers
Rising population
Better standard of living
Concentration of people and values in large 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
1950 30% of world‘s population in urban areas2005 50% of world‘s population in urban areas2030 60% of world‘s population in urban areas
14Green Cross, Brisbane, 30 August 2008
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, …)
15Green Cross, Brisbane, 30 August 2008
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
16Green Cross, Brisbane, 30 August 2008
Increasing business opportunities - ENERGY
2.1% year growth in energy consumption until 2020 => new sources required
Australian energy consumption
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
Insurers: promote these technologies by insurance cover in the construction and performance phase
Covers for low-carbon technologies/energies e.g. carbon capture and storage technologies
17Green Cross, Brisbane, 30 August 2008
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
South East Queensland (SEQ): Tropical Cyclone
Estimation of return periods extremely difficult
High uncertainties (i.e. large range of losses) from models, exclude storm surge
