BERLIN _ Last year saw the lowest financial costs from natural disasters worldwide since 2009 as the El Nino weather phenomenon reduced hurricane activity in the North Atlantic, a leading insurer said Monday.
The year’s most devastating disaster was the earthquake in Nepal in April, but only a fraction of the resulting losses was insured.
Insurer Munich Re said in an annual survey that both insured losses and overall costs resulting from disasters were the lowest since 2009. It said that there were some $27 billion in insured losses, while overall costs including losses not covered by insurance totalled $90 billion. Those figures were down from $31 billion and $110 billion respectively in 2014.
The costliest single event for the insurance industry was a series of winter storms that hit the northeastern U.S. and Canada in February. They generated insured losses of $2.1 billion and total losses of $2.8 billion.
In contrast, the earthquake in Nepal caused total damage valued at $4.8 billion, but only $210 million of that was insured. That underlined the fact that, in developing countries, the level of insurance coverage remains very low.
In several other years, hurricanes hitting North America in particular have caused significant costs to the insurance industry.
However, “in terms of financial losses, we were somewhat fortunate in 2015: strong tropical cyclones frequently only hit sparsely populated areas or did not make landfall at all,” said Peter Hoeppe, the head of Munich Re’s risk research unit. “In the North Atlantic, El Nino helped to curtail the development of heavy storms.”
El Nino is caused by the warming of waters in the Pacific Ocean that causes changes in rainfall patterns. Hoeppe cautioned that scientists believe the phenomenon may be followed by its twin sister, La Nina, which would encourage the formation of North Atlantic hurricanes.
Insurance Bureau Canada:
Canadian communities need to adapt to avoid the projected increasing costs due to climate change, according to a new study by Insurance Bureau of Canada (IBC). The Study of Economic Impacts of the Weather Effects of Climate Change, released today, estimates some of the future costs to the Halifax, N.S., and Mississauga, Ont., communities from specific severe weather events stemming from climate change. It points to the need to increase infrastructure investments now to reduce costs down the road.
“Halifax, Mississauga and other Canadian municipalities are working hard to adapt to changes in our climate. But they can’t do it alone,” said Amanda Dean, Vice-President, Atlantic, IBC. “Municipalities tell us they need cooperation and funding from provincial and federal governments to prepare. This study provides a partial analysis of the significant costs of severe weather events in our future.”
Researchers looked at two severe weather events per city. For Halifax, they studied extreme winds and storm surge flooding. For Mississauga, they considered ice storms and stormwater flooding.
For each weather event, the researchers calculated what the economic costs to the city could be as a result of these weather events five years out (in 2020) and 25 years out (in 2040). They also considered the effect of worsening climate change, and ran the numbers for 2020 and 2040 three times – first using the cities’ current climate conditions, and then assuming moderate and high acceleration in the rate of climate change. Here are some of the results:
For Halifax by 2040:
- The annualized loss expectancy from extreme wind events could be about $18 million. A moderate increase in the rate of climate change could increase this figure to $20 million.
- One extreme wind event (calculated as a 1-in-25-year event) could cost an estimated $123 million to $126 million.
For Mississauga by 2040:
- The annualized loss expectancy from ice storms could be about $9 million. A moderate increase in the rate of climate change could increase this figure to about $12 million per year.
- One severe ice storm (calculated as a 1-in-25-year event) could cost an estimated $23 million to $38 million.
“As a port city, Halifax is acutely aware of the sea level rise occurring in its harbour, and the need to prepare for more extreme weather conditions,” said Shannon Miedema, Acting Manager of Energy & Environment for the Halifax Regional Municipality. “Halifax was an early adopter of greenhouse gas emissions tracking and reduction targets, and our Mayor recently signed on to the Compact of Mayors to show commitment and support in the lead up to the 2015 Paris Climate Conference (COP21). Halifax is also active in climate adaptation and resilience building efforts, incorporating these considerations into our policies, plans and projects. This study helps us make a business case to take action in the short term, alongside our efforts to take a precautionary approach to decision-making.”
“In Mississauga, we’re working with other levels of government to study the impacts of climate change so that we can prepare ourselves to prevent future impacts,” said Brenda Osborne, Director of Environment for the City of Mississauga. “Currently we’re working with the Peel Climate Change Strategy Partnership to examine risks and impacts to the community from climate change as well as implementing a stormwater charge to better maintain and expand our stormwater infrastructure.”
Across Canada, insured damages from extreme weather events have cost almost $8 billion since 2010, which is only a portion of the total economic costs to the country. Research, including the IBC study released today, is key to assisting governments, companies and Canadians to prepare for the future effects of climate change. The Canadian home, auto and business insurance industry is advocating for adaptation to climate change to help individuals and communities reduce their risk.
IBC conducted the Study of the Economic Impact of the Weather Effects of Climate Change with support from Natural Resources Canada through Canada’s Adaptation Platform. The study was conducted with the support of Team Green Analytics (Green Analytics Corp. & Ontario Centre for Climate Impacts and Adaptation Resources). The full study, which includes an executive summary, and a backgrounder are available at www.ibc.ca.
Groups are warning that Alberta’s new climate change strategy will hit people who live in rural areas harder than people in cities.
The plan includes a carbon tax that the NDP government estimates will cost an average family about $500 a year by 2018 and about $960 by 2030.
Paige MacPherson of the Canadian Taxpayers Federation says many consumers will pay more to drive and to heat and power their homes. There will also be added costs for groceries and other goods, she says.
The changes will be felt more acutely outside of urban areas, she suggests.
“In rural Alberta there is no bus to take if you need to get your kid to daycare or you need to get yourself to work,” she said Monday.
“Anything that needs to be transported across our province _ the price is going to go up.”
MacPherson also suggested the planned phase-out of coal-fired power plants will mean a loss of jobs and a shrinking tax base in small rural communities.
The federation bases its assumptions on a report it completed on the effects of British Columbia’s carbon tax. The report, submitted to the B.C. government in 2012, determined that people in urban areas benefited by shifting their burden to people in rural areas and the suburbs.
It also found the tax put more pressure on the agriculture, manufacturing and resource sectors.
Alberta’s plan calls for rebating part of the money raised by the carbon tax _ about $3 billion in 2018 _ to middle- and lower-income families. The province says about 60 per cent of households will receive some kind of refund.
The NDP government is not expected to spell out exactly how it will spend the carbon tax until next year.
Environment Minister Shannon Phillips said as the government develops its policy, it will work to ensure that the tax doesn’t have “detrimental economic effects.”
Al Kemmere, president of the Alberta Association of Municipal Districts and Counties, said people in rural areas care about the environment. But the carbon tax could be a challenge for the farm economy.
“We are fuel users when harvest goes on and crops get put in, and we may not have the ability to pass these costs back on to end users.
“It could ultimately have a negative impact on the profitability of agriculture,” said Kemmere, who represents 69 rural municipalities.
He hopes the government will ensure some money raised by the carbon tax will directly benefit rural areas.
Jack Mintz of the University of Calgary School of Public Policy said the $3-billion levy is equivalent to bringing in a provincial sales tax.
“It is a pretty big tax. B.C. used the revenues to lower corporate tax rates and personal income tax rates. Alberta’s revenues are going to be spent on transit, adjustment programs, energy efficiency,” he said.
“It will hit more heavily people in rural areas.”
Opposition Wildrose Leader Brian Jean said the plan could lead to dramatic power price spikes that businesses will pass on to consumers.