Munich Reinsurance Group in Australasia

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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

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Global mean air temperature - observations
Temperature anomaly (?C) relative to the
1961-1990 average (14?C)
2007 is 8th warmest year on record. The last 13y
(1995-2006) represent the warmest on record,
exception 1996. 2007 anomaly 0.40C, above the
1961-1990 annual mean.
Source CRU, UK (2007)
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Urgency!
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Australian climate change, observations

• Warming of 0.9oC since 1910, mostly since 1950
  due to increases in greenhouse gases
• 2005 was Australias 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
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Number of significant natural catastrophes, global
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Economic losses vs Insured losses since 1950s,
global
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Night on earth
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South East Queensland (SEQ) scenarios
Gold Coast

• SEQ Brisbane, Gold and Sunshine Coast
• gt 2.7m residents, 66 of states population
• Strongest population growth in Qld (71 within
  the last 5 years!)
• Australias highest exposed values concerning
  TCs, hence highest accumulated losses.

1966, population 40,000 today gt 508,000
Source Climate Change and Coastal Erosion, Prof.
R. Tomlinson, ABS, Qld population update.
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Population trends in metropolitan areas
  2021 2021 2051 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

• Projections compared to June 2004 population
• Fertility rate, mortality, internal and net
  overseas migration

Source ABS
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Climate change projections

• Mid range emission scenario for 2030 (relative to
  1990)

Sydney mean warming of approx 0.9?C Increase in
the frequency of hot days (above 35?C)
Reduction in rainfall over Australia
Source CSIRO/BoM
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Strategic approach to climate change


Three areas
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Munich Reinsurance Group in Australasia

• Thank you

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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 worlds population in urban
areas2005 50 of worlds population in urban
areas2030 60 of worlds population in urban
areas
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Munich Res 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, )
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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
  Councils Green Star program

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Increasing business opportunities - ENERGY
Australian energy consumption
2.1 year growth in energy consumption until 2020
gt new sources required
More hot spells gt air conditioners gt 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

Covers for low-carbon technologies/energies
e.g. carbon capture and storage technologies
Insurers promote these technologies by
insurance cover in the construction and
performance phase
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South East Queensland (SEQ) Tropical Cyclone

• 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

Estimation of return periods extremely
difficult High uncertainties (i.e. large range of
losses) from models, exclude storm surge