Australia’s QBE Insurance Group (QBE.AX) said on Monday climate change could make some premiums unaffordable, especially for customers exposed to extreme weather events, and was a “material risk” for its operations across the globe.
During 2019, QBE’s net Australia-Pacific cost of catastrophe claims jumped to $193 million from $106 million the year before, led by unprecedented floods in Australia’s north east coast and horrendous bushfires across the country’s south east.
The insurer said it has started to adjust its catastrophe models to factor in the expected impacts of climate change until 2100, and would assess the impact on its weather-related exposures from emissions and temperatures.
In the short-term, QBE would manage higher claims by considering event frequency and severity in its capital planning and will deploy a comprehensive catastrophe reinsurance program, it said.
Over the long-term, it expected the physical impacts of climate change “will result in our customers seeking increased insurance for the protection of their assets and the services they provide.”
“This may cause insurance premiums to become unaffordable, especially for customers in areas more exposed to weather-related events, potentially resulting in a loss of revenue.”
Insurers and banks are also facing stricter regulatory scrutiny over their response to global warming, with shareholders expecting better disclosures and transparency on climate-related risks.
In its annual climate disclosure, QBE said it plans to phase out all direct insurance services for thermal coal customers by 2030, in an effort to cut emissions responsible for rising global temperatures.
It is also committed to shunning direct insurance services for new thermal coal mines, power stations or thermal coal transport infrastructure.
Globally, the economic costs from natural disasters have exceeded the 30‑year average for seven of the last 10 years, while the number of extreme weather events globally has tripled since the 1980s, QBE CEO Pat Regan said in the company’s annual report.