A new report published by Lloyd's and Risk Management Solutions warns that without adaptation, insurance losses from coastal flooding for high-risk properties could double by 2030.
Lloyd's chief executive Richard Ward says: ''With over half the world's population expected to live within 100 kilometres of the coastline in 25 years' time, it is imperative that we address this risk now by starting to adapt.''The world cannot insure its way out of climate change, but the insurance industry can play a key role in the fight against it by encouraging adaptation. ''If this doesn't happen, insurance will become more expensive and less available.''
Because rising sea levels threaten all coasts, insurers can't diversify risk.
The insurance sector has hundreds of thousands of coastal property and other key infrastructure on its general insurance books, but developers, insurers and governments are all grappling with the impact of predicted rising sea levels on homes in low-lying areas close to the sea.
In Australia, insurers are suggesting a fund into which owners of low-lying land would pay a regular levy for compensation when sea levels cause their land to become permanently unusable.
The Insurance Council of Australia has estimated that over the past 12 months, severe weather has already cost about $2.2 billion in insured losses. One general insurer has estimated that the value of Australian coastal property at risk to rising sea levels and erosion is between $50 billion and $150 billion.
Detailed vulnerability mapping would be available there in 2010, yet it would not ban development or predict sea level rise precisely.
That is partly because mapping likely sea level rise could greatly diminish coastal property values, the cornerstone of the wealth of thousands of families.
Investors Demand Climate Risk Disclosures
Who Will Pay The Costs Of Climate Change?