CLIMATE CHANGE AND TRENDS OF NATURAL
DISASTERS – WHAT IS TO BE DONE
2nd Conference of the OECD International Network on the Financial Management of Large
Scale Catastrophes
Peter Hoeppe
Geo Risks Research/Corporate Climate Centre
Munich Re
 Insurer for Insurances
 Founded 1880
 One of the leading reinsurance
companies
 Covering risks of natural hazards
is part of the core business
2
Munich Re the First Alerter to Global Warming
MR-Publication
Flood / Inundation (August 1973)
© January 2007, Münchener Rückversicherungs-Gesellschaft, Geo Risks Research
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Origins and Types of Natural Catastrophes
 Extraterrestrial: Meteorites
No human influence
 Geophysical (terrestrial): Earthquakes, volcano eruptions,
tsunamis
No human influence
 Atmospheric (weather): Windstorms, floods, storms, hail,
lightning, avalanches, mud slides
Pieces of evidence for human influence, risk of change!
Trends of Natural Disasters
The last years have brought records in natural disasters
in respect to:
Intensities
Frequencies
Damages and losses
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Heat wave of 2003, with more than 70,000 fatalities the
largest humanitarian natural catastrophe in Europe for centuries
Perceived Temperature
on 8 August 2003 and
excess mortality
Heat stress
extreme
300
high
2.300
moderate
9.400
light
comfortable
light
moderate
19.500
high
extreme
1.000
20.100
800
Cold stress
2.700 15.000
Sources: Robine et al., 2007;
German Weather Service, 2004
August 2005 – Hurricane Katrina
6th strongest hurricane, largest losses of a single event
source: AP
25.-30.8 Hurricane Katrina, USA (1.322 fatalities)
Economic losses (US$ m):
Insured losses (US$ m):
125.000
61.000 (NFIP included)
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July 2005 – Mumbai Flood
On 26th July 2005 the meteorological station at Santacruz in North
Mumbai (India) recorded 944 mm of rainfall within 24 hours, the highest
ever in the history of precipitation recordings in India.
Economic losses (US$ m):
Insured losses (US$ m):
5.000
Fatalities:
1150
750
Flood series in the UK, June- July 2007
Largest flood loss ever!
Overall losses: > US$ 8 bn
Insured losses: US$ 6 bn
Source: www.metoffice.gov.uk/weather/seasonal/summer2007/index.html
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Tropical Cyclone Nargis, May 3, 2008
Wind velocities up to 215 km/h
(Cat 4)
Floods in the Irrawaddy delta,
also Yangoon affected
Human catastrophe
Estimated number of fatalities
about 100,000
Source: http://www.reliefweb.int
© 2008 Münchener Rückversicherungs-Gesellschaft, GeoRisikoForschung, NatCatSERVICE
Victoria Wildfires, Australia (Black Saturday Fires)
February 2009
Wildfires, February 2009
Overall losses: US$ 1,300m*
Insured losses: US$ 650m*
Fatalities: 173
*Losses in original values
© 2009 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE. As at June 2009
Source: Reuters, Berlin
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Munich Re NatCatSERVICE – One of the world‘s most
comprehensive databases on natural catastrophes

From 1980 until today all loss events

For USA and selected countries in Europe all loss events since 1970

Retrospectively all Great Natural Catastrophes since 1950

In addition all major historical events starting from 79 AD – eruption of Mt.Vesuvio (3,000 historical data
sets)

Currently more than 26,000 events documented
Natural catastrophes 2008
Earthquake, tsunami,
volcanic eruption
Storm
Flood
Extreme temperature
(heat wave, forest fires)
Great natural catastrophes:
Earthquake China
Hurricane Ike
Cyclone Nargis
Winter damage China
© 2009 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE. As at June 2009
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Natural catastrophes in Asia
Great natural catastrophes in Asia 1950 – 2008
Geophysical events
(earthquake, tsunami, volcanic activity)
Hydrological events
(flood, mass movement)
Meteorological events
(storm)
Climatological events
(extreme temperature, drought, wildfire)
© 2009 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE – As at September 2009
Natural catastrophes 2008
Weather catastrophes in Asia 1980 – 2008
Number of events
400
350
300
250
200
150
100
50
1980
1982
1984
1986
1988
Meteorological events
(Storm)
1990
1992
1994
1996
1998
2000
Hydrological events
(Flood, mass movement)
© 2009 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE – As at September 2009
2002
2004
Climatological events
(Extreme temperature,
drought, forest fire)
2006
2008
Global natural disasters 1980 – 2008
Geophysical, meteorological, hydrological events
500
450
400
350
Number
300
250
200
150
100
50
1980
1982
1984
Geophysical events
(Earthquake, tsunami,
volcanic eruption)
1986
1988
1990
1992
Meteorological events
(Storm)
1994
1996
1998
2000
Hydrological events
(Flood, mass movement)
© 2009 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE
2002
2004
2006
2008
----- Trend line
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Climate change probably has a significant impact on increases of
nat cat losses, especially in North America and Asia/Australia.
Annual growth rates of nat cat losses and climate component
1980
–
2007
Nat cat loss trend (% p.a.)
Climate component (% p.a.)
Global
North
America
Europe
Asia/
Australia
11
11
8
15
4
5
1
6
Comments
 These data are indicative only – a more precise determination of the regional loss drivers
related to climate change is needed (e.g. via LSE cooperation)
 Nat cat loss trend: growth rates of original/nominal values and not adjusted for inflation
 Climate component: actually “Climate plus X” because influencing factors include
anthropogenic climate change, natural climate variability, changes in vulnerability and
changes in population distribution
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Global Warming is Real!
Continental Temperature Changes
Quelle: IPCC FoAR, 2007
Black lines: decadal averages of observations
Blue band: 5-95% range 19 simulations from 5 climate models using only natural forcings
Red band: 5-95% range for 58 simulations from 14 climate models using natural and anthropogenic forcings
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Climate Change and Extreme Weather Events
(IPCC, 2007)
very likely > 90%
likely >66%
more likely than not > 50%
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Trends of heavy precipitation events during
summer monsoon in India
Source: Goswami, B. N. et al. (2006), Science 314
Increase of Sea Level for different CO2-Scenarios
Quelle: Rahmstorf (2007), Science, 315, 368
140 cm
A1FI
B1
50 cm
*Basis: Range of ΔT = 1.5º-5.8ºC (IPCC TAR)
Observed changes in sea surface temperatures
NATL =
WPAC =
SPAC =
EPAC =
NIO =
SIO =
North Atlantic
West Pacific
South Pacific
East Pacific
Northern Indic
Southern Indic
Source: Webster et al. (2005),
Science, 309
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Residence Time of Greenhouse Gases
in the Atmosphere
Greenhouse gas
Value 1750
Value
Human
Residence
Relative
Share
[ppm]
2007 [ppm]
share
time
green-
human
[%]
[years]
house
GHE
potential
[%]
CO2 (Carbon dioxide)
280
384
30
120- 150
1
62
CH4 (Methane)
0.7
1.78
30
10-12
23
20
0.27
0.32
20
80-150
270-
6
N2O (Nitrous oxide)
310
CFCs (Chlorofluoro-
0
carbons)
SF6 (Sulphur-
0.00001 -
100
1-260
0.0000005
0
0.0000042
1-3
1-3
500-
10
12000
100
3200
22200
<1
hexafluoride)
H2O Water vapor
Source: IPCC, diverse
few days
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Munich Re as a risk carrier
© 2009 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE. As at June 2009
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DESERTEC Concept
for Energy, Water and Climate Protection
© 2009 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE. As at June 2009
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DII Founding Meeting at Munich Re
13 July 2009
Desertec Industrial Initiative (DII)
12 companies signed a Memorandum of Understanding to establish
a Desertec Industrial Initiative (DII).
The objective of this initiative is to analyse and develop the technical, economic,
political, social and ecological framework for carbon-free power generation in the
deserts of North Africa.
Insurance Linked Adaptation to Increasing Weather
Extremes in Developing Countries
Munich Climate Insurance Initiative (MCII)
MCII
MCII was founded in 2005 on initiative by
Munich Re
Today MCII is a registered non profit
organisation with members from:
Insurance, NGOs, Relief Organisations,
Research Institutes, World Bank and
independent experts.
Objectives:
Develop insurance-related solutions to help
manage the impacts of climate change in
developing countries.
Recent activities:
MCII-Submission to UNFCCC with concrete suggestions of insurance tools to be
implemented in a Post-Kyoto-Protocol. Suggestions are being discussed by delegates of the
climate negotiations on their way to Copenhagen.
RISK MANAGEMENT
MODULE
The MCII Proposal
TIER 1
Climate Insurance
Pool
High Layer
RISK
Premiums
paid by AF
($5 bn)
Middle Layer
RISK
Support
financed by
AF ($2 bn)
Low Layer
RISK
Support
financed by
AF ($3 bn)
Insurance
Pillar
TIER 2
Support for micro and
macro insurance systems
Prevention Pillar
The two-tiered insurance pillar
• Meets the principles set out by the UNFCCC
• Provides assistance to the most vulnerable, and
• Includes private market participation.
mainly
Rough
estimated
annual costs:
$ 10 bn
Evaluating the economics of climate risks & opportunities
in the insurance sector
Collaboration between Munich Re and the London School of Economics
Main areas of research activities
 quantifying the costs of a climate-related increase in natural catastrophes
 dealing with the uncertainties of climate models
 evaluating the potential and consequences of emissions trading systems and the
appropriate design of such schemes
 estimating the economic impacts of climate change on the BRIC states (Brazil,
Russia, India, China)
Institute:
Chair:
Management:
Project duration:
Sponsoring:
Centre for Climate Change Economics and Policy at LSE
Lord Nicholas Stern
Prof. Rees (LSE), Prof. Gouldson (Leeds)
2008-2012
£3m (~ €4m)
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Conclusions
 Natural catastrophes, especially weather related events, are increasing in
number and magnitude especially in Asia.
 Global warming is real.
 There is more and more scientific evidence for causal links between climate
change and increasing frequencies and intensities of natural catastrophes.
 We have to mitigate global warming and adapt to the changing risks in respect
to the regionally specific risk patterns.
 In Copenhagen ambitious CO2-reduction targets should be fixed to avoid
dangerous, unmanageable climate change.
 The Copenhagen outcome should provide adaptation funds for developing and
emerging countries, including new insurance solutions.
 The insurance industry supports climate change mitigation and adaptation
measures by sharing its knowledge with the public and providing custom made
covers for innovative technologies.
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THANK YOU!