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Climate change now part of catastrophe models according to Lloyd’s

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Severe storms in Europe could quadruple in number and flood risks may triple by 2080, according to new climate change scenarios outlined in a Lloyd’s report.

Catastrophe Modelling & Climate Changeproduced by Lloyd’s Exposure Management & Reinsurance team, says policymakers and planners need to make use of climate model projections, but also take account of the uncertainty in them.

“There are good physical reasons to expect events to become more extreme,” Head of Exposure Management & Reinsurance Trevor Maynard says in the report.

“For example, as the temperature rises the humidity rises, giving the potential for larger floods.”

The report says the frequency of heatwaves has increased in Europe, Asia and Australia, but drought is expected to decrease in northwestern Australia and central North America.

Lloyd’s says the climate is changing and it is imperative that any trends are considered and incorporated into catastrophe models. The report includes short articles by the major risk modelling companies.

All of the contributors confirmed that where any trends are established in the data, they will be included in their model calibration processes. The report says re-evaluation is important, because scientific consensus around the effects of climate change is strengthening.

The study AIR Worldwide carried out for the Lloyd’s report focuses on the South Pacific, and says Geoscience Australia expects a future increase in the frequency of tropical depressions, tropical storms and category 5 storms.

“Rising sea levels around the world could have significant implications for insurers in the context of storm surge,” another modeller, RMS, says. It points out that Superstorm Sandy, which struck along the US east coast in 2012, broke 16 historical tide records.

RMS Senior Director Paul Wilson says climate change-induced sea level rises caused Superstorm Sandy's surge losses in New York to be 30% higher than they might otherwise have been.

The report says 2011 is regarded as a record year for natural catastrophes overall, with insured losses costing the industry more than $US127 billion ($135.7 billion).

Last changed: May 12 2014 at 4:35 PM

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