Property insurance premiums will soar by up to 50% as global temperatures rise, the Association of British Insurers (ABI) warned this week.
A 4°C rise would result in premiums rising by 27%, and a 2°C rise − considered likely by 2040 and virtually inevitable by 2090 − could bring a 16% rise in premiums.
The ABI has examined the financial implications of average temperature rises of 2°C, 4°C and 6°C on the insured cost of flood and storm damage in the UK. Its report The Financial Risks of Climate Change concludes that insurance premiums could rise by 47% if average temperatures rise by 6°C.
The ABI’s report also found that the average annual insured losses from river flooding and flash floods in the UK could rise by 14% to £633M based on a 4°C average temperature rise.
“The continued widespread availability of property insurance in the future depends on taking action now.”
Nick Starling, ABI
Wales and south west England were identified as the regions which could be worst affected. In the South West, insured losses for average annual flood and wind damage could rise by 29% and 24% respectively.
The ABI said there was a danger in the long term that if flood risk was insufficiently limited, some properties could be uninsurable. “The continued widespread availability of property insurance in the future depends on taking action now,” said ABI director of general insurance and health Nick Starling.
“A 2°C temperature rise may be inevitable, but we can limit further increases. The clear message to world leaders meeting at the UN’s Copenhagen Climate Change Summit in December is that they must reach agreement on ambitious emission reduction targets.
“And, closer to home, the UK Government needs to push ahead with the Flood and Water Management Bill.”