Insurance companies warn global warming will cost $70 billion annually. (Environmental Intelligence).

Natural disasters in 2002 may cost more than $70 billion, according to Germany-based Munich Re, one of the world's largest insurance companies. Company experts attending UN talks on climate change in New Delhi, India, in October 2002, attributed the vast majority of the damages to climate change. As of September, natural disasters had cost countries and communities an estimated $56 billion.

In a separate report, the UN Environment Programme (UNEP) estimated that in the next decade losses from climate would reach close to $150 billion, if current trends continue. The report, "Climate Change and the Financial Services Industry," calculated that losses due to natural disasters appear to be doubling every decade and in the past 15 years add up to $1 trillion.

"Climate change, linked with human-made emissions, is already underway," said Klaus Toepfer, head of the UNEP. "The world is facing a rise in extreme weather--events of the kind witnessed in 2002--that will impact on every facet of life including agriculture, health, water supplies, and wildlife." The floods in Europe in August 2002, the worst in 150 years, incurred insured losses amounting to $5 billion. Typhoon Rusa, which hit South Korea in late August and early September 2002, cost $6.6 billion.

Insurance companies and reinsurance banks are increasingly concerned with the potential effects of global warming. A continued upsurge in severe climatic events could overwhelm the industry. Some experts in corporate governance have warned that lawsuits from governments could hold company officers accountable for failing to protect their companies from climate-related risk. "The insurance business is first in line to be affected by climate change," said Franklin Nutter, President of the Reinsurance Association of America. "It is clear that global warming could bankrupt the industry."

Swiss Re, Munich Re, Gerling, Skandia, Storebrand, and other large insurers are working to forge public-private partnerships through which governments would help cover some portion of the insured losses owing to natural catastrophes. Swiss Re has also introduced a questionnaire for its clients as a measure to encourage corporate efforts to mitigate climate change.

"Given the financial muscle available to them, these institutions could move markets and minds to deliver a cleaner, healthier and less vulnerable world for the benefit of the world economy, for the benefit of people everywhere," said Toepfer.

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