Germany's Munich Re AG (MUV2.XE), one of the world's largest reinsurers, Tuesday said economic and insured losses caused by climate change will continue to widen in the future, calling for a near-term deal to ensure a substantial reduction in global greenhouse gas emissions.
Germany 's Munich Re AG (MUV2.XE), one of the world's largest reinsurers, Tuesday said economic and insured losses caused by climate change will continue to widen in the future, calling for a near-term deal to ensure a substantial reduction in global greenhouse gas emissions.

"We need as soon as possible an agreement that significantly reduces greenhouse gas emissions because the climate reacts slowly and what we fail to do now will have a bearing for decades to come," said management board member Torsten Jeworrek.

"In the light of these facts, it is very disappointing that no breakthrough was achieved at the Copenhagen climate summit in December 2009," Jeworrek said, pointing to the marked increase--more or less tripling--in major global weather-related natural disasters since 1950.

Earlier this month, leaders of the U.S. , China and other major economies agreed on a new climate accord in Copenhagen , though many have said it wasn't ambitious enough and a future round of negotiations is now required to hash out the details. The accord contained no specific targets to reduce greenhouse gas emissions by 2050. A proposed 50% cut that was in earlier drafts was removed.

The pact calls on developed nations to provide $30 billion to help developing nations deal with the effects of climate change from 2010 to 2012. By 2020, rich nations aim to jointly mobilize $100 billion a year for poor nations.

Under the deal, countries have pledged to try to keep atmospheric concentrations of carbon dioxide low enough to keep average global temperatures less than two degrees Celsius above preindustrial levels; many scientists say breaching this threshold could have catastrophic consequences. But the agreement doesn't specify how countries will achieve that goal.

Munich Re also said it will step up its own initiatives in the matter, including investments of up to EUR2 billion in renewable energy and a strong commitment to the Sahara solar power project Desertec, which aims to come up with a feasible plan for generating solar power in the Sahara within the next three years.

Munich Re said losses caused by natural disasters cost the global insurance industry around $22 billion in 2009, helped by substantially lower U.S. hurricane activity than a year earlier, when the insurance industry had to pay around $50 billion for damage caused by natural disasters such as winter storms, hurricanes, cyclones, floods and earthquakes.

The figures are similar to estimates by Swiss peer Swiss Reinsurance Co. (RUKN.VX), which estimated at the end of November that the bill the insurance industry had to pay for natural disaster losses in 2009 amounted to around $21 billion.

Munich Re said "severe weather events accounted for 45%, or nearly half, of global insured losses" in 2009. It also said this year's lower bill for natural disasters and the absence of "severe hurricanes and other mega-catastrophes" shouldn't be taken lightly, as there was a large number of moderately severe natural disasters.

"In particular, the trend toward an increase in weather-related catastrophes continues, while there has fundamentally been no change in the risk of geophysical events such as earthquakes," said Peter Hoeppe, who heads Munich Re's Geo Risks Research unit.

Reinsurers and primary insurers provide insurance protection against losses caused by large natural and man-made disasters, many of which are related to climate change.

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