The cost of natural disasters associated with climate change is likely to bankrupt the world economy in 2065, the insurance industry's leading expert on global warming warned here yesterday. Mr Andrew Dlugolecki, director of CGNU, one of the world's six largest insurance groups, said the bill for property damage caused by storms, floods and other natural disasters was rising by 10 per cent a year.
At a press conference hosted by the UN Environment Programme, he said this was expected to increase "at an exponential rate" as the effects of climate change become more pronounced. "When that begins, it will happen at a frightening pace".
Mr Dlugolecki, co-author of a recently published assessment of the likely impacts of climate change on countries within the EU, has been the principal voice of the insurance industry at climate change summits since 1995.
He said yesterday that the industry was "beginning to run out of money", not just from footing the bills for catastrophic events, such as the recent devastating floods in Europe, but also for other weather risks.
"In the current circumstances, the Kyoto Protocol is becoming almost irrelevant", Mr Dlugolecki said, referring to its minimal target of reducing the greenhouse gas emissions by 5.2 per cent before 2012.
"Insurance is not the answer", he declared. "We need a more strategic response which must be integrated into creating more sustainable societies". Otherwise, "we are going to suffer very major damage 40 or 50 years from now".
Based on a rising tide of natural disasters, he warned that the cost of climate change "will exceed the world's GDP (gross domestic product) by 2065", unless serious steps were taken to reduce greenhouse gas concentrations in the atmosphere.
"We need to lobby governments to pay attention to the message that they must take action now to change things in 40 years time", he said, adding that the insurance industry, which had a lot of information, would help to identify the hazards.
Asked whether it would stop insuring property in high-risk areas, he said that it would continue to do so, but only when other measures were taken, such as improving flood defences; even so, there would be changes in cover and higher premiums.
But Mr Dlugolecki, who is a Scot, said there would also be opportunities for business. "Financial institutions need to realise that there will be a big switch to renewable energy, with a corresponding shift in economic power". Dr Robert Watson, chairman of the UN's Intergovernmental Panel on Climate Change, said there was "no doubt" that the impact of global warming would be "quite severe", particularly for poorer people in the most vulnerable countries.
It was already "affecting the very foundations of sustainable development". Even if there were comprehensive cuts in greenhouse gas emissions, Dr Watson warned that it would "take centuries for the climate system to restore itself".
Asked what the likely effects would be on Florida, currently the centre of political attention in the US, he said cities such as Miami would have to be protected by dykes, as in the Netherlands, but the Everglades "will be largely lost".
Mr Klaus Topfer, executive director of UNEP and former environment minister in Germany, said the vulnerability of Florida to rising sea levels showed that there would be "no winners from climate change and a lot of losers".